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    kunagunda's Avatar
    kunagunda Posts: 1, Reputation: 1
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    #1

    Nov 18, 2007, 02:21 PM
    IRS tax implications after a bankruptcy
    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's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    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!
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