With less than a month to go until the tax filing deadline, many Erie County residents are already hard at work on their 2014 tax returns. Those who were divorced during 2013 will find themselves with a new box to check. Instead of “Married Filing Jointly” or “Married Filing Separately,” they will now check “Single” or “Head of Household.”

So what does that mean for you? Aside from different thresholds and limits, you may also be more susceptible to tax audits. Because of the change in your filing status, the IRS will learn of your divorce, and that, unfortunately, may raise some red flags.

When you file for divorce in Erie County Family Court, you will be required to participate in a “forensic audit,” a process in which the judge overseeing your case will determine the value of all of your assets in order to divide them between you. If the judge notices any inconsistencies in your financial history, they are required to report you to the IRS, which will then likely conduct an audit.

Even if your forensic audit doesn’t turn up any inconsistencies, the IRS may be more likely to initiate an audit simply because of your new marital status.  One of the most potentially harming aspects of this is the statute of limitations for IRS audits of newly-divorced taxpayers. After your divorce, the IRS has three years to conduct an audit of your finances during your entire marriage. If they find a “discrepancy” over 25 percent, the statute is increased to six years. If they find fraud, the statute is extended indefinitely.

In our next blog post, we will discuss potential defenses to tax audits after divorce.

Source: Forbes, “Divorce Causes Tax Audits,” Cameron Keng, Feb. 10, 2014