By Denise French, MAFF, CVA, CDFA, CRPC
A woman who is considering divorce met with us recently. She has been a stay at home mom for 25 years and her husband has been the primary breadwinner. Other than the bank accounts, he has kept their passwords protected, their investments secret, his exact income undisclosed and he excludes her in the tax preparation process each year. She feels like she is in the dark financially. She also feels like he’s hiding money now that divorce is an option. This is where we have been asked to help.
We are asked to help her assimilate information which would give her an idea of their net worth or at least an idea of what assets are in the estate. We asked her to gather any information she can find and bring to us. She was surprised at what she could find. She had all the banking information already and then upon digging at their home she found old IRA statements, old tax forms, letters from his employer, and several other forms. All of which she brought into us.
We were able to give her a rough idea of what she has today based on the statements, but more importantly we were able to find assets she wasn’t aware of. We did that through the W2 which was sent to their home via regular mail due to tax season. Her husband may choose to deny owning these assets, but the W2 cannot lie! Now that these assets are exposed the wife’s attorney can mandate information on these assets through the discovery process, even if the husband tries to deny them.
You can also look for assets that are hidden in your estate, and tax season is the perfect time to perform this seeking expedition. Not only will the W2’s be in the mail, but so will a host of other tax forms. These forms could uncover income from retirement accounts, contributions to retirement accounts and other various bits of financial information.
The W2 is mandated to be mailed by January 31 of each year. Box 12 is particularly important in discovering what is owned by your estate. The most meaningful W2 Box 12 codes for finding hidden assets are as follows:
• D — Elective deferral under a 401(k) cash or arrangement plan. This includes a SIMPLE 401(k) arrangement.
• E — Elective deferrals under a Section 403(b) salary reduction agreement.
• F — Elective deferrals under a Section 408(k)(6) salary reduction SEP.
• G — Elective deferrals and employer contributions (including non-elective deferrals) to a Section 457(b) deferred compensation plan.
• H — Elective deferrals to a Section 501(c)(18)(D) tax-exempt organization plan.
• J — Nontaxable sick pay (information only, not included in W-2 boxes 1, 3, or 5).
• K — 20% excise tax on excess golden parachute payments.
• L — Substantiated employee business expense reimbursements (nonta
• R — Employer contributions to your Archer medical savings account (MSA). Report on Form 8853:, Archer MSAs and Long-Term Care Insurance Contracts.
• S — Employee salary reduction contributions under a Section 408(p) SIMPLE. (Not included in Box 1).
• V — Income from exercise of non-statutory stock option(s) (included in Boxes 1, 3 (up to Social Security wage base), and 5). See Publication 525, Taxable and Nontaxable Income, for reporting requirements.
• W — Employer contributions (including amounts the employee elected to contribute using a Section 125 cafeteria plan) to your health savings account (HSA).
• Y — Deferrals under a Section 409A nonqualified deferred compensation plan.
• Z — Income under a nonqualified deferred compensation plan that fails to satisfy Section 409A. This amount is also included in Box 1 and is subject to an additional 20% tax plus interest. See Form 1040 instructions for more information.
• AA — Designated Roth contribution under a 401(k) plan.
• BB — Designated Roth contributions under a 403(b) plan.
• EE — Designated Roth contributions under a governmental 457(b) plan. This amount doesn’t apply to contributions under a tax-exempt organization Section 457(b) plan.
• FF — Permitted benefits under a qualified small employer health reimbursement arrangement.
• GG — Income from qualified equity grants under section 83(i).
• HH — Aggregate deferrals under section 83(i) elections as of the close of the calendar year.
For help with your estate, call our office to schedule a 30-minute complimentary consultation.