Hiding income before divorce is never a good idea

On Behalf of | Mar 22, 2019 | High Asset Divorce |

Divorce is unpleasant for many reasons. Although some of the reasons have to do with the emotional consequences of ending a marriage, the one that many people with significant amounts of property and assets all go through is figuring out who gets what. Wealth and real estate can go from feeling like security to being a burden when it all has to be negotiated.

Some divorcing spouses are tempted to save money and assets by hiding them during negotiations or court proceedings. This is always a bad idea, as settlements are usually invalidated if assets were hidden or either spouse is later shown to have deceived the other or the court during the negotiations.

One man attempted to hide income by overpaying the Internal Revenue Service during the tax season. The man was acting on the assumption that he would get the money back once he was filing as a single person. When the accountant who discovered the deception filed the back taxes, she secured tax refunds for around $200,000 per person.

Divorcing spouses should review their tax returns very carefully and draw attention to any missing money or assets as soon as possible. Any high deferrals or abnormally high payments may indicate a problem. The earlier a mistake or deception is found, the less time and effort it takes for courts and attorneys to reverse the damage.

Spouses planning any separation, especially one involving significant assets, should consult legal representation to increase their chances of an amenable settlement. A lawyer can help with negotiations, mediations or court appearances related to divorce.