Financial Mindfulness and Empowerment in Marriage (Tax Returns)
Federal and state tax returns document the household’s gross income, adjusted gross income, and net income (for you and your spouse) and document that your federal, state tax obligations have been met. These documents also serve as the documentary basis for applying for loans (e.g. mortgages), bank relationships, and other types of personal guarantees and borrowing (business and personal).
Why is this important in a divorce action? — Tax returns are the most important document in drafting arguments for Financial Orders, calculating Alimony. Accordingly, having access to tax returns makes the discovery process both easier and faster.
[The advanced check list illustrates the level of detail that begins to be explored when prepping in a divorce proceeding]
Access your Returns
Where are your tax returns?
Who prepares your tax returns?
If an accountant prepares your tax returns, do you know who the accountant is?
Do you know how to contact the accountant?
Have you introduced yourself to the accountant?
Review your Returns
Do you review your tax returns each year before they are filed or do you simply sign?
Have you reviewed the 1040 form of your tax return?
Do you know your spouse’s wages and salary?
Do you know where on the tax return to find this information?
Have you reviewed your spouse’s W-2 form?
Do you or your husband receive 1099 forms?
Have you reviewed this form?
Do you file a Schedule C?
How much interest and dividend income you and your spouse receive each year? Do you know from what accounts you receive dividend and interest income from?
Is your interest income tax exempt income?
Is the dividend income qualified (eligible to be taxed at capital gains rate) or non-qualified (taxed at your regular income tax rate)?
Do you know where on the tax return you can find this information?
Do you know what capital gain and capital loss income is?
Do you know what items can be deducted on your tax returns?
Do you or your spouse have your own businesses?
Do you or your husband complete a Schedule C?
Do you or your husband receive K-1 form?
Do you know where on the tax return you can find K-1 or Schedule C information?
Do you know why you receive and complete these forms?
Have you reviewed these forms?
If so, what are the gross revenues?
What are the expenses of the business?
What is the profit of the business?
The Big Picture
What is your adjusted gross income?
How much do you pay in federal taxes each year?
How do you pay in state taxes each year?
Know your Withholdings and Timing of Estimated Tax Payments:
Do you know if payments for federal and state taxes are deducted from each paycheck received or are quarterly payments made or are no taxes paid?
If there is a Refund, Know Where the refund Gets Paid
If there is an overpayment of taxes, is the overpayment refunded or is applied to the following years taxes? If an over payment is refunded, where is the refund mailed or directly deposited into what account?