Following the death of a spouse determining your filing status can be difficult. Although you cannot file a joint return year after year you can continue to use the joint return rates for two more years if you qualify as a “surviving spouse.” Joint return rates for tax filing are more favorable than single rates or head-of-household rates. Surviving spouses also get larger standard deductions than a single taxpayer or head of household and also has other tax advantages.
The following requirements must be met if you would like to qualify as a surviving spouse. Lindemeyer CPA can help you determine if you meet these qualifications and how you can take advantage of any other available tax advantages.
- Your spouse died during one of the two years immediately preceding the tax year for which the return is being filed.
- You have a child by either blood or adoption or a stepchild who qualifies as your dependent for that tax year.
- With the exception of temporary absences such as vacation school medical care or military service you have a child who lived with you for the entire year. Exceptions are made for children who were born or died in that same year.
- You have paid for more than half the cost of maintaining your home.
- You were eligible to file a joint return in the year of your deceased spouse’s death (even if you didn’t actually file jointly).
- You have not remarried before the end of the tax year for which the return is being filed.
To help determine if you are eligible for surviving spouse tax filing status here is a brief explanation of some of the requirements you must meet.
When is Your Child Considered Dependent?
A child or stepchild who has lived with you for the entire year is your dependent if the child is less than 19 years old at the end of the calendar year. (Less than 24 years old if the child is a full-time student for at least five months during the calendar year) and did not provide more than half of his or her own support for that year.
If the child’s gross income for the calendar year in question was less than $3900 for 2013 ($3800 for 2012) and you provided over half of their support for the year you would qualify under this particular requirement.
Maintaining a Household
When attempting to calculate the cost of maintaining a household include expenses incurred for the mutual benefit of the household members. Include items such as property taxes mortgage interest rent utilities insurance for the property repairs and upkeep and food consumed while in the house. There is no need to include medical care clothing education life insurance or transportation.
How to Handle Capital Loss Carryovers
When you experience a capital loss due to the sale of property in excess of capital gains can be deducted up to $3000. Any loss in excess of this may be carried forward and deducted in later years. These capital losses are deductible only by the spouse who incurred the loss. They can be deducted on a decedent’s final income tax return but cannot be carried over after death. Capital loss from the sale of your spouse’s private property even if it was a sale made in a year when you filed a joint return cannot be carried over either. However losses from the sale of your separate property are unaffected by your spouse’s death.
Charitable Contribution Carryovers
Based on the donor’s income the deduction for gifts to charity is subject to a limit but any excess can be carried forward for five years. If you and your spouse made contributions during the previous five years that was subject to the limitation the contribution must be allocated using a specific formula. The portion that is allocated to you can be carried over for the full five years. The portion allocated to your late spouse can be used in the year of death but not in later years.
Adjusting Income Tax Withholding
Because of your spouse’s death you may have to adjust the amount of income tax that your employer withholds from your paycheck. To be sure you are withholding the proper amount check your withholding and if necessary submit a new Form W-4 with the revised information.
Keep in mind if you remarry you will no longer be eligible to file as a surviving spouse but you will be able to file a joint return with your new spouse.
If you do not meet all of the requirements to qualify for surviving spouse status you may qualify to file instead as “head of household” which is more favorable than the “single” filing status. You may qualify for the head-of-household status if you:
- Have furnished more than half the cost of maintaining a household for more than half of the year that was the main home for your qualifying child or a person who would have been your qualifying child if you hadn’t released the dependency deduction to the other parent.
- Pay more than half of the cost of maintaining as your household a home that is the principal place of residence for more than half the year of a dependent or you
- Maintain a household (not necessarily your own) that for the tax year is the principal place of residence for either parents if you are entitled to a dependency deduction for either parent.
If you have recently lost a spouse and have questions regarding your tax filing status click here for an initial consultation and we will contact you to set up a time to discuss any of your tax filing preparation and financial needs that you may have. At Lindemeyer CPA we view every client relationship like a partnership.
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