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Because with the increasing tax rate of higher brackets, a reduction of taxable income with the higher bracket saves you more tax than exact reduction in a lower area. So let's compare the tax saving of contributing $1000 by an individual with a $30,000 income with a single person with a $100,000. You in order to file a tax return for that specific year a two year period before the bankruptcy. For eligible to wipe the actual debt, cause have filed a tax return for the irs or State debt you want to discharge at least two years before declaring bankruptcy.

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