It's the time of year to which many people in Philadelphia certainly don't look forward: tax season. Filing our taxes may be tedious, difficult or confusing, but trying to file taxes after a divorce could lead to some unexpected consequences: a tax audit. While there is no guarantee that someone will be subject to an audit following a divorce, the chance of an audit increases if one spouse hid assets from the IRS in the past.
Divorce is often complicated, there is no getting around it. Someone in Philadelphia may recognize that a divorce may be intensely emotional or that it could fundamentally change a parent's relationship with his or her children, but they may not realize how widespread the changes are following a divorce. Two-income households suddenly become single-income households. One parent may be paying the other parent child support even though the parents have nearly equal parenting time. Friendships may end. And, a divorce could get someone in trouble with the federal government.
That is certainly not to say that if individuals in Pennsylvania wants to divorce that they shouldn't for fear of an audit. Instead, they should make sure that the family law attorneys they work with are aware of the numerous consequences, both positive and negative, of divorce.
When previously hidden assets are exposed during the divorce proceedings, which are then reported to the IRS by a family law judge, the IRS may choose to audit both spouses, even if they are no longer married. Working with an attorney to explore the different types of family and tax law reliefs before the IRS even decides to audit can be a good way to prepare for the worst.
Source: Forbes, "Divorce Causes Tax Audits," Cameron Keng, Feb. 10, 2014