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IRS tax implications after a bankruptcy
kunagunda
Nov 18, 2007, 02:21 PM
I went through a bankruptcy this past year, lost my job and had loans out on my 401k, can I be taxed on the loans that I defaulted on to my 401k?
AtlantaTaxExpert
Nov 18, 2007, 06:18 PM
Yes, you can. The bankruptcy does NOT forgive those loans nor does it mitigate the tax consequences.
You will owe income taxes to both federal and state PLUS a 10% Early Withdrawal Penalty.
Sorry!