Divorce Financial Checklist

- Current marital status (separated, filed, pending, temporary order)  

- Expected filing status for the year (MFJ, MFS, HOH)  

- Who qualifies for Head of Household under IRS rules  

- Who qualifies to claim dependents  

- Who qualifies for Child Tax Credit, EITC, education credits  

- IRS tie‑breaker rules if both parents attempt to claim a child  

- State‑specific filing considerations (Georgia: HOH rules, dependency disputes)

- W‑2 income for both spouses  

- Self‑employment income (Schedule C, 1099‑NEC, gig income)  

- K‑1 income from partnerships, S‑corps, trusts  

- Rental income (Schedule E)  

- Alimony received or paid (post‑2019 non‑deductible rules)  

- Child support (non‑taxable, non‑deductible)  

- Bonuses, RSUs, stock comp vesting schedules  

- Business distributions vs. guaranteed payments  

- Cash flow projection for each spouse post‑divorce  

- Estimated tax payments and underpayment exposure  

- Ownership %  

- Original cost basis  

- Improvements added to basis  

- Depreciation taken (critical for recapture)  

- Suspended passive losses  

- Mortgage balance & equity  

- FMV (with comps or appraisal)  

- §121 exclusion eligibility (2‑of‑5 rule)  

- Whether the transfer qualifies under §1041 (non‑recognition)  

- Who keeps the property and who keeps the recapture liability  

- Whether the spouse receiving the property also receives the carryover basis  

- If rental: PALs, QBI, depreciation schedules, land vs. building allocation  

Critical trap:  

If you keep the house, you also inherit all depreciation recapture and carryover basis.

- Pre‑tax vs. after‑tax basis  

- Employer contributions  

- Vesting schedules  

- Outstanding loans  

- QDRO requirements  

- Roth ordering rules  

- Whether the division triggers taxable events  

- Whether the spouse is receiving taxable assets disguised as “equal value”  

- Future RMD exposure  

- NUA (Net Unrealized Appreciation) opportunities for employer stock  

Critical trap:  

A $200k Roth ≠ a $200k Traditional IRA. Most advisors treat them as equal. They are not.

- Cost basis for each holding  

- Unrealized gains/losses  

- Wash sale exposure  

- Concentrated positions  

- Tax‑loss harvesting opportunities  

- Embedded capital gains in mutual funds  

- Who inherits the basis after transfer  

- Whether the spouse is receiving assets with built‑in tax bombs  

Critical trap:  

A $300k brokerage account with $250k of unrealized gains is NOT equal to $300k cash.

- Entity type  

- Ownership %  

- Capital account balance  

- Basis (stock basis + debt basis)  

- Debt allocations  

- Suspended losses  

- Distributions vs. guaranteed payments  

- K‑1 history (3 years minimum)  

- Buyout terms  

- Valuation method  

- Whether the transfer qualifies under §1041  

- Whether the spouse inherits phantom income  

- Whether the spouse inherits debt basis exposure  

Critical trap:  

If she receives S‑corp shares with no basis, she may owe tax on income she never receives.

- Mortgages  

- HELOCs  

- Auto loans  

- Personal loans  

- Business loans  

- Credit cards  

- Tax liabilities (federal, state, payroll, sales tax)  

- IRS installment agreements  

- Joint debt vs. individual debt  

- Who is legally responsible vs. who is assigned responsibility  

Critical trap:  

Debt assigned in divorce is not binding on creditors.  

If he stops paying, she is still liable.

- Health insurance (COBRA, employer, marketplace)  

- Life insurance (ownership, beneficiaries, cash value)  

- Disability insurance  

- Long‑term care  

- Auto & home insurance  

- Umbrella policy  

- Business liability coverage 

Critical trap:  

If alimony or child support depends on his income, she needs a life insurance policy she owns.

- Capital loss carryovers  

- NOLs (Net Operating Losses)  

- Passive loss carryovers  

- QBI eligibility  

- AMT credit carryovers  

- Foreign tax credit carryovers  

- Education credit eligibility  

- §179 and bonus depreciation recapture exposure  

- State‑specific credits 

Critical trap:  

Carryovers do not automatically split.  

They follow the taxpayer who created them unless negotiated.

- Depreciation recapture on real estate  

- Depreciation recapture on business assets  

- Phantom income from partnerships  

- Built‑in gains in S‑corps  

- QDRO mishandling  

- Incorrect basis transfers  

- Misvalued retirement accounts  

- Misallocated passive losses  

- Taxation of forgiven debt  

- Innocent spouse relief exposure  

- Filing status penalties  

- Underpayment penalties  

- Checking accounts  

- Savings accounts  

- Emergency fund  

- Joint accounts  

- Business accounts  

- Venmo/PayPal/CashApp balances  

- Cryptocurrency holdings  

- Access to liquidity post‑divorce