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Tax filings may hold the key to exposing secret cash in a divorce

On Behalf of | Feb 26, 2019 | Divorce

Florida is home to many successful entrepreneurs, business owners, retirees and working professionals. However, it is also home to lots of couples who are considering divorce. When unpleasant factors come together in a high-asset separation, questions are bound to pop up regarding money and how it will be split. Unfortunately, divorce can bring out dishonesty in some spouses, leading to hidden bank accounts and secret spending.

According to some financial experts, suspicious spouses may need only to look at tax filing information with the IRS to uncover the truth. For example, one divorcing husband was caught making overage payments to the IRS using a secret account. He had planned to file back taxes to retrieve the money once he was single. When the scheme was uncovered, however, hundreds of thousands of dollars were due to the wife.

Another tactic that may be used to withhold cash from a spouse during divorce is to place extra money in tax-deferred investments and accounts. This lowers the take-home pay on paper, allowing the spouse to make a case for smaller support payments in court. Additionally, a spouse may try to funnel money to a company in a bid to hide it as claimed income. In most cases, taking a detailed look at a couple’s tax filings can expose these activities.

Many divorcing spouses also find it beneficial to work through tax records with a divorce attorney. An experienced lawyer will know what to look for when it comes to things like hidden accounts and income withholding tricks. Furthermore, they can compile this information for presentation in court to ensure support payments are justified and that an equitable split of finances is ordered.