How Spouse’s Death Impacts Filing Taxes

As individuals retire or age into Medicare, their insurance situation can change dramatically. There are a multitude of options open to those with Medicare. The terms are different, the prices are different, the products offered are dramatically different each year.

The purpose of this column is to give those who are eligible for Medicare, or soon to be eligible for Medicare, some understanding of their insurance options and how it could impact their health and finances.

These questions and answers are meant as a guide to help you understand the complex questions you are now thinking about. Each individual’s specific situation may create a different solution. You shouldn’t necessarily do what your friends, family and neighbors do.

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Q: My spouse has passed away, and I was wondering about filing taxes. How does this death impact my filing of taxes next year?

A: First, I am sorry for your loss. The loss of a loved one changes so many things. This is especially true of a spouse.

I do not know a whole lot about taxes, so as usual, for this one I reached out to my friend, Jack Kachermeyer, the district coordinator of the TCE program for New York District 4 – Chautauqua, Cattaraugus and Allegany counties. Jack told me that most couples file jointly. Once a spouse has died many people immediately switch to filing as a single person. This is because later (next year) when you are filing your taxes, you are a widow(er) and may be trying to get used to being a single person. So you look at that line, filing single or jointly, and say, “I must be single.” But for part of the year that you are filing taxes for you were married. For this reason when you complete your taxes next year you should file “jointly.”

When working with your tax professional or if you do your taxes on your own, you want to evaluate which way makes your tax situation better for you. If you file as a single your allowable deductions are less. One way or the other may benefit your situation financially. A single person had a standard deduction of $5,950 in 2012. A couple – married filing jointly – had a standard deduction of $11,900. There is also a status called “qualifying widow(er)” that has a standard deduction of $11,900. This qualifying widow(er) status appears to be for those surviving spouses with dependent child.

I am impressed that you are thinking about this filing of taxes so early since we try not to think about taxes until tax time in the spring of the year. But I find that often we lay awake at night and think about what needs to be done in the future. Some bridges we can’t cross yet, but have to wait until we get there to think about them. It is almost always good to do some thinking ahead of time about how to handle situations.

This is a good opportunity for you to think about adjusting your withholdings for the future. Your situation is different now that you are a single person according to the IRS. This means you may want to adjust your tax withholdings to better serve your tax liabilities. You should talk to a tax professional to make this decision.

I have run into similar situations when it is not a spouse who has died, but a parent, or aunt whom someone was helping. I also want to remind survivors that taxes are supposed to be filed as long as the individual who died had income in that calendar year. So keep those documents, at least for a year, to be sure you don’t need them for filing your taxes and other purposes. Besides, those of you who are regular readers know I suggest keeping documents for at least five years. The IRS suggests keeping all tax-related documents for at least seven years. That is true for someone who has passed away as well.

The IRS has a very useful website with lots of answers if you use the Internet, www.irs.gov. There is a specific publication that addresses this very issue of filing taxes after someone has passed away. It is “Publication 559; Survivors, Executors and Administrators.” You can request this from the IRS or review the document online. The number is 1-800-829-1040. Call Monday through Friday from 7 a.m. to 7 p.m. This number will get you to an IRS tax assistant who will help you through whatever your question is. There is also a local office in Jamestown at 961-5100, Monday through Friday, 8:30 a.m. to 4:30 p.m.

Hopefully some of this information and resource for additional information will help you through this difficult time.

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Janell Sluga is a geriatric care manager certified and works for Senior Life Matters, a program of Lutheran Senior Housing, and has worked in Chautauqua County with seniors for more than 18 years. She is HIICAP (Health Insurance Information, Counseling & Assistance Program) counselor-trained by Office for the Aging. She does not sell insurance or represent any insurance company. She is an unbiased source of insurance and education to help seniors choose the best option for them.