As we all know, the holidays can be very difficult for those who are experiencing the holidays without a loved one for the first time. Unfortunately, the first tax season after such a heart-breaking event can be even more difficult. Doing a deceased loved ones taxes is one of the most difficult things I have to do each year, but also one of the most fulfilling as I work through this difficult time with the families. I must ask seemingly insensitive questions, which I always warn about in the beginning, but I also get to hear all the wonderful stories associated with those very loved people. If you find yourself in this position for the upcoming tax season, there are some things you should know and things can do to prepare and make this as easy on yourself as possible.
Let’s start with a couple of things things you should know:
- If you are the surviving spouse, you can file married-filing-jointly the first year. The two years following that you can file as “Surviving Widow/Widower”. However, make sure to look as other alternative (married filing separately and single) to see what is the most beneficial to you.
- If you lost a child this year you can still claim them as a dependent on your taxes, providing they meet the dependency requirements. The only one you don’t have to worry about is the six-month rule to providing the living expenses, so it doesn’t matter what time of year he/she passed away.
Now, on to the things to prepare for when doing taxes for the deceased:
- As a spouse, you can sign the return as the surviving spouse, which must be indicated. However, if you are not the spouse, you have to have legal authorization to sign. The court generally assigns this legal authorization.
- This may or may not be needed, but a 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) form (https://www.irs.gov/pub/irs-pdf/f1310.pdf) should be filled out and submitted to the IRS, even if you are the spouse and especially if you were not the primary taxpayer (taxpayer listed first on the tax return).
- Have copies of the death certificate and the legal authorization to sign the returns(if you are not the spouse) for your tax preparer.
- Most times there are significant medical bills that coincide with the death of your loved one. Get an accounting of what has been paid for that year. It may or may not help with the tax return, but it’s worth a look.
- Be prepared to answer difficult questions posed by your tax preparer. Believe me, we don’t want to ask these questions and we know it hurts, but we really are looking out for your best interests.
The death of a loved one and its tax implications can get incredibly more complicated than the information provided above. These are just some simple items that get you thinking, which is why it’s so important you enlist the help of a CPA or Enrolled Agent to help you through this. It’s our job to think clearly when it’s difficult for you to do so and allows you to focus on you and your family, not your taxes.