Miller & Associates Attorneys LLP

Divorce & Family Law: Litigation, Mediation, Collaborative
Proudly serving Sacramento, El Dorado, and Placer counties.

Problem-Solving Family Law Attorneys Dedicated To Results

How can taxes help you identify hidden assets and/or an affair?

On Behalf of | Jan 4, 2022 | Divorce Mediation |

If you plan to file for divorce or are amid one, and if you suspect your spouse of either hiding assets or having an affair, you may wonder what you can do to reveal his or her behavior. While a forensic accountant can help you uncover suspicious activity, there is certain documentation you can use to speed up the process.

According to CNBC, tax returns and other tax documents can tell you a lot about a person’s goings-on. The publication explains how you can use tax documents to learn more about your spouse and his or her affairs.

Question non-compliance

If your spouse, who typically complies with the IRS, suddenly “forgets” or chooses not to file tax returns for one to two years, ask questions. As one woman’s story proves, some clever soon-to-be-divorcees overpay in estimated taxes and then fail to file returns to get that money back. The money will sit until a payee files a return, at which point, the IRS will issue the refund. The goal is to receive the refund once the divorce is final, that way the extra payments cannot be subject to property distribution laws. You can easily discover if this is your spouse’s plan by reviewing his or her tax vouchers and comparing them to previous years’ returns.

Pick apart tax documents

Tax documents, such as your W-2s and 1040s, can tell you a lot about the assets you have, even if they remain hidden. For instance, your spouse’s W-2 can tell you exactly how much he or she makes versus how much he or she pays into workplace plans and/or withholds from take-home income. High deferrals into accounts such as health savings accounts and employer-sponsored 401(k)s may be attempts on your spouse’s part to hide income in order to reduce take-home pay. The less your spouse makes on paper, the less he or she will have to pay in child support or spousal support. Simply reviewing pay stubs may be all you need to do to uncover hidden income to which the law may entitle you.

Be wary of new business ventures

Though new business ventures are not always fishy, it is not uncommon for entrepreneurs to use new business entities to cover up affairs. Per a CNBC story, one husband opened an entity in Florida under the same name as his New York branch. During his divorce, his wife decided to look a bit into the Florida entity and discovered that, though money was going to that “branch,” there was no company by that name conducting business in the Sunshine State. The listed business address, it turned out, was the address of the husband’s mistress.

These are just a few scenarios that tax documents can help you uncover. If you truly have suspicions, though, retain help sooner rather than later.