Q:

Subject: Joint returns after death of spouse

 

I ran across <http://www.taxguru.org/re/TaxCoachHomeSales.htm> while searching for something else; this line - "Since you can file jointly for two years following their death, you can exclude up to $500,000, on top of the new basis, during that two-year period." jumped out at me.

 

I think it is perhaps overstated - I don't know if the author is thinking of the qualifying widower filing status, or the case where one taxpayer passes away after the end of a tax year, but before a return is filed, meaning that two additional tax returns will be filed for the decedent.

 

(e.g., one spouse passes away on Jan 10, 2007 - the surviving spouse will be able to file a 2006 joint return, and a 2007 joint return, assuming other tests are met.)

 

Of course, two tax returns are not two years, so I'm still not clear how to get the "two year period" for filing joint returns after death.

 

I am also a Tax Coach subscriber but can't seem to get to their website at the moment; I saved a copy of a plan I produced with their system a few days ago and it does seem to include the above text.

 

Do you have any insight?

A:

That was a good spot on your part.  I can also only assume that they are referring to the qualifying widow(er) status, which should be better explained in such a way as "some people can file jointly..."

I'm passing this along to Ed & Keith at TaxCoach in case they want to elaborate on that text.  Their system was down yesterday, but they are back up today.

Thanks for spotting that and passing it along to me.

Kerry Kerstetter

From Keith at TaxCoach:

Hi Kerry -

 

Thanks for copying us on your email.  The piece you quoted out of TaxCoach is referring to qualifying widow(er) status, but Ed has done some further investigation.  QW status does apply for the two years after the spouse dies, but at issue is whether the surviving spouse can still exclude gain during that time.  What Ed's dug up thus far is inconclusive.  For now we've updated the module to clarify that section and remove the reference to the two following years.  Depending on what else Ed is able to find out about it, we'll revise it further.

 

Thanks for bringing that to our attention.  Also, sorry about the day we were down - our host had a major issue with the shared server that affected nearly 1000 of their customers!   We've since migrated to a dedicated server, so we should have uptime percentages a lot closer to 100.

 

Best regards,

 

   Keith

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/26/2007 12:32:00 PM Send this post: