You’re unlikely to want to handle the tax implications of losing your spouse so soon after he or she passes. Unfortunately, the tax issues surrounding what is known as the “separation of death” of two individuals must be addressed starting in the tax year in which the death occurred. In other words, you will probably need to significantly change your filing practices and tax strategy within 12 months of your spouse’s death.
To make it relatively easier on you, there is a robust body of legal precedent to govern situations like these, and you are entitled to handle your tax filing for the calendar year during which your partner passed in one of several ways. However, your ultimate decision will largely depend on your marital status at the end of the year in which you spouse passed, your long-term financial goals and your current financial situation.
In most cases, you will be allowed to file jointly with your deceased spouse for the year in which he or she passed. To avoid an IRS audit, however, you will need to record accurate income information from his or her records, and if your spouse was employed at the time he or she passed, you will need to contact his or her employer for the appropriate W-2 or independent contractor form. In addition, you may need to talk to the legal executor of your spouse’s estate to determine any other deductions or forms of income that should be included in the final tax return.
Keep in mind that if you remarry before the end of the same calendar year in which your spouse passed, you are unable to file under the “Married Filing Jointly” status for that specific year. Instead, you will need to file your taxes as an unattached taxpayer and also file your deceased spouse’s taxes under the “Married Filing Separately” status. Your new spouse will need to file under the “Married Filing Separately” status as well.
On the other hand, if you remain single until the next calendar year, you may still file as a single taxpayer. However, since there are few financial advantages to using this option, many widowed taxpayer ignore it. In the future, consider filing your taxes as a “Qualifying Widow” to see if you qualify for lower tax rates. You can also claim widower or widow status for two tax years after the death of your spouse if you have dependent children living in your household, but there are no circumstances in which you can file using this protocol for the actual year in which you spouse passes.
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Author: Jay White
I started Dumb Little Man so great authors, writers and bloggers could share their life "hacks" and tips for success with everyone. I hope you find something you like!