Surviving Spouse

Husbands and wives die. It’s hard on the surviving spouse who has to make countless decisions at a stressful time. Many of those decisions will affect their income taxes. However, with a little tax planning, many of these problems can be eliminated. And that’s another post. I want to focus on filing status for the surviving spouse today.

How the deceased taxpayer and their spouse file will depend on 2 issues. First, has the surviving spouse remarried? Let’s say Jane passes away in February of 2012 and her husband Joe marries Kate in November. For 2012, Joe will file Married Filing Jointly or Married Filing Separately with Kate. Jane’s return will have to be filed as Married Filing Separate if she needs to file. If Joe doesn’t remarry, then he and Jane have the options of filing separately or jointly as married. That’s the second issue and will depend on which is better for Joe and Jane. There is no pro-rating the standard deduction and/or exemption because Jane died during the year.

After the first year, in this case 2012, how Joe files will depend on if he has dependants. If for 2013 and 2014, he hasn’t remarried and has a dependent child in his home for the whole year, Joe can use the Qualifying Widow (Widower) filing status. This allows him to use the Married Filing Joint standard deduction and tax tables. If he doesn’t have a qualifying child, Joe will file single after the year of death. With a dependent, Joe could qualify for Head of Household. The special status is only for the first 2 years after the spouse’s death and it may not be available on the state level.

Bottom line, if the surviving spouse doesn’t remarry, they can still file jointly with their deceased spouse in the year of death and get special treatment for 2 years after if there are dependents. This can give the surviving spouse a little tax breather and allow them to do some tax planning for future years. This is especially important when income will stay about the same but the surviving spouse will be paying on more income because of the reduced deductions.

Death and Taxes

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