Death and Taxes: How to File After the Death of a Spouse
Losing a loved one can be an incredibly challenging time. Amidst the emotional turmoil, there's the daunting task of dealing with financial matters—one of which is filing income taxes. This article aims to guide you through the process, offering steps and strategies to help you file taxes after losing a spouse.
How to file taxes for a deceased spouse
Step #1- Identify the filing status
The first step in filing income taxes after the death of a spouse involves determining your filing status. If your spouse passed away during the tax year, the IRS still considers you married for the entire year for tax purposes. Therefore, you must file a joint return using the "Married Filing Jointly" status.
However, if you have dependent children, you may be able to use the "Qualifying Widow(er) with Dependent Child" status for two years following the death, granting you the same benefits as a joint return. A financial or tax professional can help determine the filing status for your situation and clarify any questions you may have.
Even if your spouse filed married filing separately, income taxes must be filed for the year of their death.
Step #2- Gather the necessary documents
After establishing the filing status, compile all necessary tax documents for the year. These may include:
- W-2s
- 1099s,
- 1098 (mortgage interest statement)
- and more
Be sure to gather tax forms your spouse would have received during the year up until their death. Prior-year tax returns may aid in determining deductions or credits used to claim exemptions that qualify this year.
Step #3- Report all income
You must report the income your deceased spouse received before death on the joint return. Also, the income received after death, such as dividends or interest from property, must be reported on your spouse's final return. Be sure to include any Social Security benefits or retirement distributions received.
Step #4- Claiming tax deductions and credits
You can claim the same deductions and tax credits as when your spouse was alive. These may include deductions for mortgage interest, tax preparation fees, and medical expenses not reimbursed by health insurance. The IRS limits some of these deductions and tax credits depending on income. For this reason, visit with a tax professional to understand which deductions and tax credits your household qualifies for.
Step #5- Sign on Behalf of Your Spouse
While signing your spouse's final return, use your name, followed by "filing as surviving spouse." If the tax return is a joint return, sign it once on your behalf and then again on behalf of your deceased spouse.
Considerations for estates
It's legal to sign for a deceased spouse only if you are the executor or administrator of their estate. Due to the complexity of filing these returns correctly, seeking professional guidance is essential to avoid errors.
Legal and tax professionals specializing in estate planning can help work toward complying with tax regulations and avoid potential mistakes that could lead to penalties or unnecessary stress. Additionally, depending on the size and complexity of the estate, you may need to file a federal estate tax return. The IRS provides guidelines about who must file this return and what it should include.
Facing the aftermath of a loved one's death is challenging, and dealing with income tax returns can add to the stress. However, the steps outlined above can make the process more straightforward.
Remember, you don't have to face this challenge alone. Seek assistance from financial and tax professionals and take one step at a time.
Sources:
https://www.irs.gov/newsroom/how-to-file-a-final-tax-return-for-someone-who-has-passed-away
https://www.aarp.org/money/taxes/info-2022/filing-for-deceased-taxpayer.html#
Important Disclosures:
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
