Filing a joint tax return for the year of a spouse’s death can be beneficial

Surviving spouses are faced with many financial and tax-related decisions. One critical issue to consider is whether to file a joint or separate tax return for the year of the spouse’s death.

Timing of the final tax return

When a person dies, his or her personal representative (called an executor in some states) is responsible for filing an income tax return for the year of death (as well as any unfiled returns for previous years). For purposes of the final return, the tax year generally begins on January 1 and ends on the date of death. The return is due by April 15 of the following calendar year.

Income that’s included on the final return is determined according to the deceased’s usual tax accounting method. So, for example, if he or she used the cash method, the income tax return will only report income actually or constructively received before death and only deduct expenses paid before death. Income and expenses after death are reported on an estate tax return.

The surviving spouse, together with the personal representative, may file a joint return. And the surviving spouse alone can elect to file a joint return if a personal representative hasn’t yet been appointed by the filing due date. (However, a court-appointed personal representative may later revoke that election.)

Filing a joint tax return

In the year of death, the surviving spouse is generally deemed to be married for the entire calendar year, so he or she can file a joint return with the estate’s cooperation. If a joint return is filed, it’ll include the deceased’s income and deductions from the beginning of the tax year to the date of death, and the surviving spouse’s income and deductions for the entire tax year.

Here are some possible advantages of filing a joint return:

• Depending on your income and certain other factors, you may enjoy a lower tax rate.
• Certain tax credits are larger on a joint return or are unavailable to married taxpayers filing separately.
• IRA contribution limits, as well as the amounts allowed as deductions, may be higher for joint filers.

Bear in mind that there may be disadvantages to filing jointly. For example, higher adjusted gross income (AGI) may reduce the tax benefits of expenses, such as medical bills, that are deductible only to the extent they exceed a certain percentage of AGI. 

Turn to us for help

If you’ve lost your spouse recently, before you make a final decision on whether to file a joint return, we suggest you contact your tax advisor to determine what is best in your situation.