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Can past tax returns aid in uncovering hidden assets?

On Behalf of | May 8, 2020 | Property Division |

Whether you are in your first marriage, second marriage or you are facing a grey divorce, you will likely struggle with the division of assets and debts. Depending on the amount and type of assets, negotiating a proper split can quickly become a complicated matter. These issues can be disrupted further when one spouse has been actively hiding assets from the other for a number of years.

While many hidden asset disputes quickly devolve into a he-said, she-said affair, it is not uncommon for an intrepid investigator to uncover even the faintest paper trail. Many investigators will first and foremost thoroughly examine the tax returns filed by the couple. Discrepancies in these documents can immediately raise serious red flags.

There are five parts of the tax return that investigators might use to uncover hidden assets:

  • Itemized deductions: This section of the tax return might list assets or sources of income that weren’t disclosed anywhere else. For example, a deduction for property taxes raises a red flag about the existence of hidden property.
  • Interest and dividends: Assets and property that generate interest and dividends can be compared against new, undisclosed or seemingly lost assets.
  • Profit or loss from business: Investigators will use this section to carefully review a depreciation schedule which could reveal additional assets purchased by a related business entity.
  • Capital gains and losses: Similar to interest and dividends, individuals must report gains and losses from investments including stocks, bonds and real estate.
  • Supplemental income and loss: This section of the tax return reports income or losses from rental properties, royalties, partnerships and S corporations. A careful examination of this data can raise certain warnings to an experienced legal professional.

No matter the complexity of your assets or the duration of your marriage, it is wise to work with a trusted family law attorney who can provide the guidance and answers you need.