Tax returns are often thought of as a necessary evil. Most people don't prepare their own tax returns, instead relying upon accountants to prepare them on their behalf. Even if that is the case, you must be aware of what your accountant is doing, how he or she is filling out the forms, and most importantly, what he or she is claiming as your income. Although generally not considered to be as important as income reporting, the deductions and the amounts and purposes of same are also extremely crucial in determining your actual income.
Courts have a very heightened awareness of people's intent to defraud their spouses during divorce litigation by claiming that their income is less than what it truly is, or by taking extraordinary deductions from the income which somehow reduce their tax obligations.
While limiting your tax obligation may be your initial focus when filing your tax returns, you must always have at the back of your head the possibility of these taxes being subject to scrutiny by a divorce judge or Family Court support magistrate. Generally, once you are in front of either one of those people, it is too late to fix the errors your accountant made for the sole purpose of getting you a hefty refund. It is at those times when you will begin to regret allowing your accountant to take such liberties with your taxes for the short-sighted purpose of saving a few bucks on a tax return.
You see, the long-term effects of such income tax finagling can be quite large when you are facing a support obligation for either your child or your spouse. Just the other day, I was in Family Court with a client whose accountant thought it was a bright idea to report rent upon his tax returns simply so that he could take a depreciation amount on his rental unit when the rental unit wasn’t rented. While my client saved $2,500 on his income tax returns, he now faces a magistrate who believes that he earned $12,00 in additional annual income which is not there.
Help yourself turn fear into power when happily ever after fades away by arming yourself with this very important knowledge. Schedule your legal strategy session with us today.