Checking your soon-to-be-ex-spouse's tax return could net you gains
A lot of divorce cases come through my doors, so I've litigated all kinds. If I want to know how a case is going to go, one of the ways I'll gauge it is to see who is involved. For example, once a private investigator is called in, I know there is little hope for reconciliation. Their job is to uncover nuggets that will help us (or the enemy) win the case. But for this post, I'm going to tell you how to be your own P.I. and uncover helpful information that's as close as your home computer. That treasure trove is the 1040 tax return, and here's where to look to make sure you're not missing anything when the issue of splitting finances comes up. Of course, this is for people who don't pay attention to their yearly return (letting their partner handle the filing) or file separately.
Schedule B This is where your tax preparer puts all the information about investments—the names of mutual funds, brokerage companies, banks and other sources of dividends and interest. It's here where you'll find out if your ex is hiding funds in foreign accounts. Schedule B's minimum reporting amount for domestic accounts is $1,500. However, for anything offshore or foreign, reports must be made to the IRS here. You may not know how much is in those accounts because reports will only show interest amounts, but just the fact that accounts are listed is a green flag to research further.
Schedule D Here you'll find reported the capital gains and losses from sales of fund shares, individual stocks and other assets. Basically, just as the interest amounts in B lead you to funds, these digits lead you to the possibility of more. Just because he unloaded 100 shares of Disney doesn't mean there isn't an additional stockpile somewhere else. Check it out.
Schedule E With the way the markets are, this might be like hitting the mother lode if you know what you're looking for. Here is where income or loss from rental real estate and royalties; partnerships and S; and estates and trusts are listed. If there are items listed here, go check out the property being rented or the partnership paying out dividends. It will make the proceedings a lot more interesting when you come armed with the most important thing in any dispute—knowledge of the other side's plans and ammunition.