Tax time uncovers hidden assets

By Denise French, CRPC, CDFA

Many of our clients feel like their spouse may be hiding assets.  There are several ways to find hidden assets.  One of the best ways is to review the W2 which is mailed no later than January 31 by employers.

We have listed the codes below to pay special attention to in divorce.  They will provide information on accounts you suspect may exist but have no proof of.  The W2 is your proof.

One place you want to pay very close attention to: Box 12.  Box 12 will tell you if there is a 401k, a Roth IRA, an executive compensation account including stock options or restricted stock and even a deferred compensation account.

The codes on a W2 that can apply to finding hidden assets in divorce include:

D, E, F, G, H and S: These codes give you information about contributions to your retirement plan at work:

• D:401(k) plan
• E:403(b) plan
• F:408(k)(6) plan
• G:457(b) plan
• H:501(c)(18)(D) plan
• S:408(p) salary reduction SIMPLE retirement account
  • K: Excise tax for excess golden parachute payments.  If you have this code on your W-2, there is a golden parachute plan.
  • L: Your employer reimbursed you for employee business expenses that you paid out of your own pocket and the amount you received as a reimbursement is greater than the amount you actually spent.
  • R: Your employer made contributions to an Archer MSA (medical savings account) for you.  If you have to pay tax on any of the contributions, the amount is already included in Box 1 of your W-2.
  • V: Your income from the exercise of non-statutory stock options.  This amount is included in Box 1 of your W-2.  This is a big one!  Get statements on that account!
  • W: Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account.  Reported on Form 8889, Health Savings Accounts (HSAs).
  • Y: Deferrals under section 409(A) on a nonqualified deferred compensation plan.
  • Z: Income under section 409(A) on a nonqualified deferred compensation plan.  This amount is also included in Box 1.
  • AA: Designated Roth contributions under a section 401(k) plan.
  • BB: Designated Roth contributions under a section 403(b) plan.
  • EE: Designated Roth contributions under governmental section 457(b) plan.

If you see ANY of these codes, there is MORE information to get and frankly it can be complicated.  This is exactly where a Certified Divorce Financial Analyst or CDFA® practitioner specializes.  A CDFA can ensure that all your bases are covered.  Contact us at Divorce Strategies Group for help with the financial portion of your divorce.