How to file your taxes if your partner is deceased

The death of her partner has many financial implications. In the short term, you end up with funeral expenses, life insurance issues, sorting out your loved one’s belongings, and managing all of the assets.

As the new calendar year approaches, another challenge arises: filing taxes. How does the death of a spouse affect income taxes? Does this change the filing status? What financial issues should be taken into account in tax returns?

These are tough questions, and your best approach is to consult with a tax lawyer, accountant, or tax preparer, or use reliable tax preparation software.

Let’s go over the tax issues you need to consider if your spouse died within the past year.

Tax declaration as a widow or widower

Assuming you don’t remarry in the same year that your deceased partner died, you can still report your income taxes for that year as a joint marriage declaration or marriage declaration separately, such as noted by IRS. This gives you a larger standard tax deduction and higher tax brackets. If you’re married and filing jointly, combining a lower overall household income while using the higher brackets will likely result in a noticeable income tax refund – or at least a home tax bill. lower income.

What about life insurance? Life insurance product that you receive as a beneficiary due to the death of the insured are not calculated in gross income, so you don’t have to report them on your taxes or pay income taxes on them. However, if interest has accrued on these benefits, you must pay tax on the interest.

During the two years following the year of your spouse’s death, you may be eligible for eligible widower (s) with a dependent child. You must have at least one dependent child and not have remarried during this period. It allows you to continue to collect the same tax rates and the larger standard deduction from a married couple filing jointly.

How to report taxes for a deceased person

As noted above, most couples will have the same filing status this year as they did last year. If you and your spouse filed your tax returns together last spring, you’ll be doing it again this spring, with just a few changes. As always, if you’re unsure of what to do, contact a tax professional for help.

Property taxes

All property left to a surviving spouse is exempt from estate taxes, as clearly stated by the IRS in their inheritance tax documents. You will not be liable for inheritance tax on anything left to you by your spouse. There are a few exceptions if you are not a U.S. citizen, in which case you should consult an estate attorney to help work out the details.

Legacy retirement accounts

If a surviving spouse inherits a retirement account of a deceased spouse, they may choose to treat it as their own account in the future, according to the IRS. However, the pre-tax or after-tax status of the accounts remains. If the account was originally funded with pre-tax income, such as a traditional 401 (k), the surviving spouse will have to pay normal income taxes to the account whenever they choose to withdraw that money to the account. retirement. You can also choose to transfer the account to your own account. Contacting a certified public accountant may be a good choice in these situations.


As well: What do “before tax” and “after tax” mean? And why should I care?


Taxes a deceased person may owe

A deceased person may owe taxes to the IRS in several situations:

  • The deceased person earned income in the year of their death. Taxes on this income will be payable by the estate, usually directly by the surviving spouse. That is why survivors are allowed to report taxes for the full year as a declaration of joint marriage or declaration of marriage separately.
  • The deceased owed the IRS money in previous years for not filing taxes and did not pay all of that debt before moving on.
  • The deceased has not correctly declared his taxes in the past, which is discovered by a subsequent audit.

Who pays the taxes owed by a deceased person?

In these situations, if there is an unpaid tax bill, the executor of your deceased partner’s estate is responsible for ensuring that the money in the estate pays those tax bills. However, if the estate has already been shared between the heirs and you are identified as the owner of the common property shared with your spouse upon their death, you may be required to pay. As always, a tax lawyer is helpful in these situations.

[This article was originally published on The Simple Dollar in January, 2021. It was updated in December, 2021.]

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