Today’s Alerts: The Most Important Part of the Tax Return

My Today’s Alerts series highlights ideas generated in my divorce financial advisory practice.

When I look at a tax return I’m generally looking for previously unidentified income streams, accounts, businesses, and property.  One thing I don’t want you to miss is found in the taxes and refunds section. Refunds can be applied to taxes next year. In divorce, this is a source of cash that may be considered. If your 2013 tax refund was applied to 2014 taxes and you plan to divorce before year end, be sure you know this number. On the 2013 1040 tax, return look at line 75 for Refunds Applied to 2014.

Also look to see if there are “capital loss carry forwards”.  These losses can offset future investment gains and may be divided in divorce (assuming the losses came from marital property). For this number, you’ll need Schedule D of the 1040 tax return, Line 14.

Remember that tax returns only include information about investments and employment that produce taxable income or gains in that year.  Your family may have other investments or accounts that do not produce taxable income currently such as retirement accounts, cash value life insurance policies, or non-income producing real estate.  Also, the tax return won’t tell you much about credit card or other debt.  Adding an analysis of your and your spouse’s credit report will help round out the information you need.

Silicon Hills Wealth Management and Divorce Planning of Austin work with clients and their attorneys to help insure that financial accounts are divided in the most efficient manner possible.

Neither Silicon Hills Wealth Management nor Divorce Planning of Austin are accountants and do not provide tax advice.  Please consult with your tax professional regarding your specific circumstances.