Organizing Tax Documents? Remember—Statements, Not Screenshots

Information seems to be available at the touch of a screen or click of a mouse. If one wants to know the balance in an account, in a brief moment, one can quickly pull up the summary on their desktop or smartphone.

When several of your accounts are with the same institution, all the accounts can be summarized on a single page. This should make getting information gathered for a divorce matter quick and easy. That is until questions start to dig deep. 

What a screenshot won’t tell you is:

1. Realized and unrealized gains in an investment account. A screenshot will provide an overall balance of your portfolio holdings as of a certain date, shown as a single amount.

What needs to be known and discussed are:

  • The taxes on the gains realized, meaning stock sales that have already taken place in the account.

  • Who will be reporting those gains on their return and how the tax cost will be paid.

  • What potential gain is lurking in the balance of your current portfolio holdings. If you are counting on receiving the $25,000.00 investment account only to give up another $5,000.00 of taxes owed on the $25,000.00, you would want to know that.

2. Any after-tax contributions in your retirement accounts. A screenshot, again, will provide an overall total of all your holdings in your 401(k) plan, however, what you really should find out is:

  • How much, if any, of the total value, is made up of after-tax contributions.

  • How much was contributed with after-tax monies and how much of this was earnings, since earnings will still be taxable?

If you have any questions, please contact me for assistance.  

Susan A. Moussi, CPA, CFP®, CDFA SMD Tax & Divorce Financial Planning Consultants, Inc. Phone: 614.429.4172