The Credit Professional Winter 2018 Dec_2018_magazine | Page 18

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Income taxes for your spouse
will be due for the year in which
your spouse died. You may file
a joint income tax return for the
year of the death. Your filing
status will change the following
year, which may affect taxes
you owe as well. Check current
rules for filing by visiting the
Internal Revenue Service (IRS)
website and searching
for “decedents”.
For example, allowing your
spouse’s beloved motorcycle to
sit in the garage for five years
is likely to cause its value to
erode. Think about whether you
can remember your spouse with
a photograph rather than
keeping the item.
While you may need to sell your
home for financial reasons,
proceed thoughtfully. Check
with financial advisers to see if
The estate usually pays income a reverse mortgage might be a
taxes due on the estate’s
better option than a sale. With
income. You could be liable for a reverse mortgage, if you are
income taxes due to the federal older than 62 and qualify, you
government by the estate if you convert the equity in your home
received income from the
into cash in the form of a lump
decedent or the estate for which sum or monthly payments.
whom. It’s important to contact
taxes were not previously paid. You or your heirs repay the
all creditors to notify them of
These taxes also may be called borrower when the home
your spouse’s death.
“death taxes”. Estates valued at is sold.
more than $3.5 million may
The executor/administrator
have to pay estate taxes.
If you decide to sell your house, generally does this. In most
The federal estate tax affects
work with reputable real estate situations, you should close
only the wealthiest two percent professionals to increase your
joint accounts and open a new
of Americans, according to the
chance of getting a good price.
account in your name.
IRS. Each state has its own
estate tax rules.
Whenever you make a major
The exception: You may want
financial decision in the first
to keep some joint credit card
Tax rules can vary significantly year following your spouse’s
accounts, if you lack a credit
by state and may change from
death, think carefully about
rating in your own name.
year-to-year as tax laws are
whether it’s better to go forward
created, altered, expire, or are
now or wait a little longer. Bear It’s especially important to
repealed. Again, check the IRS in mind, however, that waiting know about all debts if you live
website and your state’s tax
too long sometimes can cause
in a state with “community
department’s Web site for
an asset to lose value.
property” laws. Generally, in a
current rules.
community property state, all
For example, allowing your
debts your spouse incurred are
Because taxes involve complex spouse’s beloved motorcycle to considered joint debts, even if
laws and regulations, consider sit in the garage for five years is the account was listed only in
getting professional help from
likely to cause its value to
your spouse’s name. That
attorneys and accountants.
erode. Think about whether you means you most likely are now
can remember your spouse with responsible for the outstanding
a photograph rather than
balance on any account.
Can you afford to
keeping
the
item.
be patient?
Many widows and widowers
make poor decisions in the
days, weeks, and even months
following the loss of a spouse.
Do you know what
you owe?
Find out what you owe and to
Do you know what it
costs to live?
If you’ve been paying the bills,
you probably have a good
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The Credit Professional
17
December 2018