personal finance

Cohen brings Trump's net worth statements to hearing. Here's how to read them


Many people are aware of common ways to reduce taxable income, such as increasing 401(k) contributions.

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Many people are aware of common ways to reduce taxable income, such as increasing 401(k) contributions.

In order to get a full view of someone’s wealth and income, you’d need additional documents, including cash flow statements and income tax returns.

“A balance sheet can show that someone has $10 million in the bank, which sounds great, but a statement of cash flows might show they’re spending $2 million more than they’re making every year,” Levine said.

“They’ll be broke in five years,” he said.

An income tax return would give you a bird’s eye view of an individual’s income sources.

However, if you want to delve into the finer details, you’d need to take a look at the schedules needed to complete that return.

For instance, Schedule A provides information on itemized deductions that a taxpayer claims. It would shed light on state, real estate and property taxes paid, interest paid on home mortgages, as well as more information on medical expenses.

It also would shed light on charitable giving, which well-to-do filers use to reduce their tax burden.

Meanwhile, Schedules B and D shed light on interest and dividends paid, as well as capital gains and losses.

More from Personal Finance:
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The average family has no idea what the tax law means for them
5 ways to jump-start your tax return

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