Ordway Law Group, LLC
Ordway Law Group, LLC
Divorce & Family Law

Why your divorce might result in an IRS tax audit

On Behalf of | Sep 15, 2022 | Family Law |

Divorce can be a highly turbulent event that changes how you live your life for months if not years to come. You likely wish to put the matter behind you as quickly as possible, but the possibility of receiving a tax audit adds yet another layer of complexity.

An IRS tax audit can be a prolonged process that hangs over your head for years, or even the rest of your life if they come to suspect you of fraud. As a divorcing individual, it is crucial for you to understand why a tax audit might become imminent and what you can do to prevent such an eventuality.

Why the IRS might perform a tax audit

If you take your divorce case to court, it is possible that hidden assets and unreported income will come to light. This creates inconsistencies with existing financial statements, and the judge has an obligation to report these inconsistencies to the IRS. Be aware that if the fault for these inconsistencies lies solely with your spouse, you can appeal for innocent spouse relief.

How to prevent an IRS tax audit

The best way to mitigate the risk of an audit is by settling your divorce privately outside of court through mediation. Otherwise, you can refer to the IRS guidelines explaining special tax rules that apply to divorced or separated individuals. Understanding these rules can help you file accurate taxes, but might not eliminate the possibility of an audit entirely.

Any divorce, particularly those that are hostile in nature, can expose financial inconsistencies that catch one spouse off-guard. Divorce mediation is one option for bringing those inconsistencies to light in a private setting so that you can maintain greater control over your financial future.

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