How Can The Death Of A Spouse Affect Tax Filing?

How can the death of a spouse affect tax filing? When tax filing season rolls around, there are some things you should be aware of if you recently lost your husband or wife. The death of spouse is unequivocally...

The death of spouse is unequivocally one of the most difficult things a person can endure. In your darkest hour, in the depth of emotional and personal upheaval, there are also many legal and financial issues that will no doubt demand your attention. In such a stressful time, it may be hard to make heads or tales of such issues, but not fully understanding these issues may prove detrimental to your welfare in the future. When tax filing season rolls around, there are some things you should be aware of if you recently lost your husband or wife.


In most circumstances, your marital status will depend upon whether you were married or not married on December, 31st of the tax year. However, in the case of death of a spouse, it works differently. "The year that the spouse passed away, you're still married... even if it's for a day in that year, you were married," notes Brian K. Gilroy, Florida Attorney and CPA. So, even if your spouse died on New Years Day in 2005, you can still generally file as married filing jointly on your 2005 tax returns. If, however, you remarry in the tax year that your spouse dies, you will need to file with your new spouse (either 'Married, Filing Jointly' or 'Married, Filing Separate').





For the two following tax years after your spouse died, you may be eligible to file as 'Qualifying Widow or Widower.' In order to file as Qualifying Widow(er) in the two tax years after the death, you must have a dependent child, provided more than half the support for yourself, your child and household, and you must have been eligible to have filed jointly with your late spouse in the tax year he/she died. Again, you must not have remarried during the tax year you wish to file as Qualifying Widow(er). "If you're spouse died in 2004, but you got remarried in 05, you're married- you're not a Qualifying Widow(er)," says Mr. Gilroy.

The benefit of filing as a Qualifying Widow(er), if you meet the requirements, is that, for the two tax years after your husband or wife passes away, you are entitled to tax rate and deductions as a couple who are Married, Filing Jointly. You cannot, however, claim your deceased spouse as an exemption.

If your spouse was a member of the Armed Forces, you may be eligible for $12,000 in death benefits, of which, in reference to the Military Family Tax Relief Act, the entire amount is exempt from taxes.

If you were not a military family, death benefits may be a much more complex issue, depending on many variables, such as the source of the benefits and your adjustable gross income (AGI). Even Social Security is an uncertain area. "Death benefits in the form of Social Security may or may not be taxable, depending on how much other adjustable income you have," says Mr. Gilroy. "The loss of a spouse is probably a time when you want to seek both legal help and tax help... In a very complicated situation, you're only going to be better off financially after seeing your tax advisor than before in a fair number of situations."

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