Tips to avoid tax audits after divorce

The Internal Revenue Service (IRS) is privy to a large amount of personal information, including marital status. As a result, when a couple goes through a divorce, the IRS knows. In some cases, this can lead to an audit.

There are a variety of red flags that can increase the risk of an audit by the IRS. During a divorce, some common examples include:

  • Hidden assets and underreported income. The connection between divorce and tax audits is so commonplace that Forbes recently ran an article addressing the issue. According the article, hidden assets and undisclosed income can lead to a red flag from the IRS, increasing the risk of an audit after divorce. These unethical practices can happen during the property division determination portion of the divorce proceeding. At this time, an individual may be tempted to underreport income or fail to reveal certain assets in an attempt to control how the assets are distributed in the hopes of ultimately receiving a larger portion of the marital property. Generally, a review of the marital assets is conducted as part of the divorce. Based on these reviews, judges are ethically obligated to report any inconsistencies that may be found.
  • Missed deadlines. It pays to get taxes completed on time. Those who are attempting to file taxes after a divorce may require information from an ex-spouse. Starting the process sooner rather than later can help better ensure all needed documents are gathered and the taxes are prepared and filed prior to the final deadline.
  • Marital status. One of the first boxes on tax documents requires the filer to choose his or her marital status. Options include: married, single and head of household. Those who choose head of household status should make sure they qualify. Generally, the person who has custody of the children for more than half the year can chose this designation.
  • Support. Be careful how support is claimed on taxes. Essentially, spousal support or maintenance can be deducted but child support cannot.

These are just a few of the areas that the IRS will watch for after a divorce. Those going through a divorce are wise to seek the counsel of an experienced divorce lawyer. This legal professional will work to better ensure that all assets are considered during the divorce