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Tax returns: A good place to start to uncover potential hidden assets

by | Oct 29, 2021 | Divorce

Although it depends on individual situations, going through the divorce process involves many steps and issues to resolve. Settling marital property is one.

In many cases, martial property is known to both parties, with retirement accounts, residential homes and other common assets that need to be divided. In other situations, known assets can become murky. One party may hide or fail to disclose property in the dissolution process to prevent it from becoming martial property subject to division in their divorce.

If you are going through a divorce and believe, for whatever reason, your spouse is hiding assets, there are ways to uncover any suspected concealed money or property.

Tax returns is one way to discover hidden assets.  Examining prior tax returns is a good place to start looking if you and your spouse file separate returns. Tax returns outline specific schedules that individuals need to disclose.

Schedule A

This section of a tax return is meant for itemized deductions like medical expenses, charitable contributions but also mortgage interest – which could reveal an asset not disclosed in any of the other Schedules on a return.

Schedule B

This section specifies interests and dividends earned on stocks and other investments. Forbes recommends taking a look at the types provided in this schedule. If you see anything different or new, it could be a hidden asset your spouse is failing to disclose.

Schedule C

Individuals who own and operate a business must fill out Schedule C to disclose profits or losses stemming from that business. Depreciation is also indicated in this section. Any depreciation on an asset that is unfamiliar to you may be worth looking into greater detail.

Schedule D

Similar to Schedule B, Schedule D requires individuals to disclose any short or long-term capital gains or losses on securities. Anything that is unfamiliar could be a security your spouse has failed to disclose.

Schedule E

This section requires individuals to report any income from entities, including partnerships or S corporations, royalties earned, or profit from rental properties. Again, any discrepancies listed in this schedule should be examined further.

If you are going through a divorce – first take an inventory of the marital property you are aware of. Then compare the assets listed in each schedule of your spouse’s previous tax returns.

Contacting a lawyer is also recommended. A family law attorney will know the disclosure rules relating to marital property in New Jersey and likely procure the help of third party professionals, like forensic financial analysts or accountants, to assist in the investigation.