Getting to Know Tax Returns
| Jurisdiction | California,United States |
| Author | Leslie Dawson, CPA |
| Publication year | 2017 |
| Citation | Vol. 39 No. 1 |
Leslie Dawson, CPA
Leslie O. Dawson is the owner of the Dawson CPA Firm in Walnut Creek, California. She is a Certified Public Accountant (CPA), a Certified Valuation analyst (CVA), a Certified in Financial Forensics (CFF) and is Accredited in Business Valuations (ABV). She has more than 30 years of experience in public and private accounting. She is involved with the California Society of CPAs, currently serving as chair of the annual "Tax Issues In Divorce Mini-Conference." She has served as chair of the statewide Family Law Section and the statewide Family Law Conference (2000). She has also served in various charitable and civic organizations, including being appointed in 2011 to a task force for the City of Walnut Creek to develop recommendations for fiscal policies.
Because I am a CPA, family law attorneys frequently ask me to help them interpret tax returns. What information do they provide, and how can it be interpreted? In this article, I will discuss some of the information one can obtain about property and income from a tax return.
Tax returns are a great information resource. How far back I will need the parties' returns depends on the issue on which I am requested to give the attorney input.
For business valuations, I generally request the five most recent years' returns. If a Pereira/Van Camp equitable apportionment analysis is required, I will need business tax returns and the managing spouse's W-2s going back to before the date of the marriage.
For income for support, I generally request the most recent two or three years of returns. It is also helpful to obtain each year's final paystub to identify deferred compensation and other benefits that may or may not show up on the W-2 and the returns. If the spouse is a partner or S Corporation shareholder, the K-1s will provide information about ownership percentage, taxable income, and actual distributions.
If there are claims of missing funds, I request the parties' tax returns going back to before the marital discord began. These returns can set a baseline of what the parties owned and their income level prior to any potential divorce planning.
If returns have gone missing, either spouse can request transcripts from the IRS by filing Form 4506-T. Generally, only the most recent seven years can be obtained and the information will be in summary form. For example, the details of rental or business income and expenses will not be included...
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