Taxes can be especially complex and difficult after an event like the death of a spouse, and it's wise to consult a professional tax adviser for assistance. However, there are a few basic things you should know before you get started.
Within nine months, you are required to file an estate tax return if the assets of the estate exceed the threshold for taxability. Your spouse's estate will not be subject to estate taxes if its net worth is less than the current exclusion amount for the year of death. Taxes, which can be as high as 50 percent, must be paid on any amount above the threshold amount. You also are required to file annual income tax returns reporting any income earned by the estate.
The Unlimited Marital Deduction allows you to avoid estate tax completely if your spouse has left everything to you in his or her will and you are a U.S. citizen.
You must file a final federal and state income tax return for your spouse on income earned that year up to the date of death. As with your return, these are due by April 15th. You can file a joint return as long as you do not remarry prior to the end of the year he or she died. If you have a child still at home, you can use the joint tax rates to figure your income taxes for two additional years.
Reassessing Your Finances
Review your will and make adjustments to reflect your new situation. You'll probably need to change who will inherit your assets and you may need to decide on a new executor. Change accounts and jointly held property to be in your name, including credit cards, deeds, etc.