Is Your Ex Hiding Cash?

One of the most difficult problems a spouse can face during a nasty divorce battle is trying to prove that their spouse is hiding cash. This occurs frequently when the family owns a cash business, like a pizza place, auto body shop, hair salon, etc. It can be very hard to prove the actual income coming in from that business if your spouse has been the one the running the business during the marriage.

A woman I know is in a terrible situation right now. Throughout the marriage, her ex claimed about a third of what he was actually earning at his business in order to avoid paying taxes. She works and technically makes more than him on paper. In reality though, he is earning double her salary. So now she faces the possibility of paying her spouse alimony even though they both know he makes much more money than her.

Since she signed the tax returns each year she is in a very delicate situation. Should she insist her ex's business makes more than it does and has for many years, they both could be in deep trouble with the IRS. She faces the possibility of losing out on alimony that she would have been entitled to had the money been "on the books" and child support payments will most likely be calculated using the tax returns as her husband's income,while he lives the high life with all of the extra cash he has stored away.

The best thing for her to do and anyone else in this situation is to hire a forensic accountant. These accountants are expensive but well worth in this situation. They will go into the business and look at everything, giving the true value of the business. You must be careful not make claims in court that the business made more money in the past. A family court judge can call the IRS if he feels the law has be broken and that can open up a hornet's nest.

If you are currently in a marriage where you own a cash business, make sure you have your own copies of all receipts and business expenses. Keep a close eye on the business's revenue. Some people have signed tax returns having no idea that their spouse was hiding money and manipulating the books. Whether your marriage is solid or not, you have a right to know about your families finances and how much money is coming into the household.