About Sally J. Boyle
Sally Boyle is committed to helping you have a smarter divorce. A member of the Institute For Divorce Financial Analysis, she supports collaborative law that encourages cooperation.
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I have advised many clients on divorce and the related tax issues. The majority have been women and invariably, they tell me their husbands may be hiding assets.
These clients also fall into three categories: First, there are those who are looking to divorce in as efficient and friendly way as possible.
They ask for advice on things like property transfers, deductibility of legal fees and alimony payments. The seek guidance on the process and what to expect. They are looking for information that allows them to have better control of the process and hopefully the outcome. They also want to confirm that the assets their husbands are declaring are complete and accurate.
Then there are those who are already divorced.
They need guidance on how to best utilize their settlements. They may be the spouse who did not drive the finances during their marriage and they now need to learn the basics of budgeting, money management and investing. They may also be in the unfortunate circumstance of having to enforce their agreement and to compel their former husbands to pay up overdue payments of alimony or child support.
Not infrequently, however, there’s a third category: women going through down-and-dirty divorces that disrupt their lives in unpleasant and expensive ways.
They may be dealing with assets with which they are not familiar or that might include a private business where they are neither working or an active owner. They are afraid that the income from these investments or businesses may be underreported or even removed and hidden. Lots of them want to know whether it’s worth hiring private investigators to track down any hidden assets. I generally say NO.
I then alert them to an alternative: The information they need to start with is often tucked away in their filing cabinets.
It is their tax returns. They can begin to gather a good part of what they need from the separate schedules submitted with the returns they filed jointly with their husbands.
When they look into those 1040s, they may discover a list of the names, amounts and sources of income that would reveal asset locations and serve as clues as to where to look. Here’s what to look for:
Schedule B. This schedule requires listing the names of mutual funds, brokerage companies, banks and other sources of dividends and interest. At the bottom of Schedule B are questions about the existence of foreign financial accounts and trusts.
The IRS doesn’t ask for a Schedule B from individuals who receive less than $1,500 in income from interest and dividends.
Instead, the IRS tells them to list their totals for those kinds of income on the first page of Form 1040. Different rules, however, apply to taxpayers with foreign financial accounts and those involved in certain foreign trusts. They must submit Schedule B, regardless of the level of dividends or interest income.
All is not lost if there’s no listing of dividend and interest amounts on Schedule B.
True, it becomes harder for a wife to discover her husband’s investments or bank accounts. Still, just listing totals of interest and dividend income on Form 1040 reveals that an ex-husband owns assets that generate interest and dividends, at least during the year covered by the return. This, in turn, gives women a starting point for where to look for assets held in their husband’s name.
Want to know more about financial planning for a smarter divorce?
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