7 Tips for Filing Taxes After the Death of a Spouse

If you have recently lost your spouse, there are some things you should be aware of when filing your taxes. Believe it or not, the tax code can actually work in your favor and help you financially.

1. Continue to file a joint return if your spouse died during the tax year and claim the full exemption amount.
2. If you have a dependent child, you can file as a “qualifying widow” or “qualifying widower” for two years after your spouse’s death.
3. Three years after your spouse’s death, if you still have a dependent child in your household, you can claim “head-of-household” to get better rates.
4. If you are the designated beneficiary of your spouse’s IRA, you can claim roll it over into an IRA account in your name. Depending on the type of IRA (traditional, Roth or inherited) you may have to take minimum distribution amounts each year; you may also be able to withdraw funds without penalty.
5. Do not report any proceeds you receive from a life insurance policy. This is not taxable income.
6. If you sell your home within two years of when your spouse dies, you can take up to $500,000 profit of the sale tax-free. This amount is based on having owned the house as a married couple and lived in it for a specified timeframe.
7. You will get a “step-up” in basis on any assets which you inherit from your spouse. For any assets that can appreciate or depreciate in value, the tax basis will be matched to the value of the assets on the day your spouse died. If you later sell or liquidate the asset, you will not be taxed for any appreciation that occurred prior to your spouse’s death.

There are many more tax filing tips for widows and widowers in Denver. The Brown Law Firm, LLC is here to help you administer the estate of your spouse and understand how to report any inheritance you receive from the estate so you can protect your family. Contact us today at (303) 339-3750 or send us a message online to arrange a meeting to discuss your unique situation.