husband worried wife lied on tax forms

            Posted on December 11, 2016 
 

Husband worried wife lied on tax forms


Q.   I’m a U.S. citizen. Annually, I earn $127,000. I married my wife six years ago. She’s from Europe and earned her U.S. citizenship after our marriage. I’m the primary caretaker of our 3-year old son.

My wife became a popular motivational speaker. She now makes daylong presentations in several parts of Europe, Asia, and this country. She keeps her financial info on her own, password-protected, computer. On our joint tax returns, she declares enough income to cover her business expenses, plus a 15 percent profit.

She just rushed off on another lecture trip and left her computer open. So because I was curious where she was buying what looked like very expensive clothing – but no charges were showing up on our credit cards - I looked at her computerized records. I saw she had deposited money in various European banks and that her income was more than 25 times what she reported. It also appears she has a boyfriend in Europe.

I’m worried about several things, one of which is her not reporting all her income on our joint tax returns. Have I violated any tax laws?


A.   Tax law required your wife to list all of her worldwide income. Assume the IRS and Massachusetts Department of Revenue discover there was unreported income. Each authority will demand payment of past taxes, plus interest and penalties. Each may also file criminal charges that could result in assessment of more penalties and a possible prison sentence.

If you didn’t know about your wife’s extra income, you can claim you’re an “innocent spouse”. You could prove that claim by demonstrating the two of you were living only on the reported income. And, when your wife started buying expensive clothing you investigated, and stopped filing joint returns. If proven, you’d be off the hook. But your wife would still have to pay back taxes, interest, penalties, and, maybe, face criminal charges.

When your wife gets home from her trip, you each have something important to say to each other. Everything needs to be put on the table. Does she plan to file for divorce to go live with her “new” friend in Europe? Was she planning to take your son with her? If she wants to stay married, will she report all income and pay all taxes? Will she put all bank accounts in both names?

Although I earned a Master of Law degree in taxation, I don’t know enough to give any advice about filing amended tax returns for the prior years. You each should each consult separate lawyers experienced in this type of problem.

While taxation was what you wrote about, I’m concerned your wife might suddenly move to Europe taking your son without your consent. Be careful. You went looking for a pin in a haystack and found a stash of IEDs, each of which is about to explode.