Handling Unfiled Tax Returns: What You Should Know
Navigating the world of taxes can feel overwhelming, especially when it comes to the financial legacy left behind by a loved one. If you’ve found yourself wondering whether to file a tax return for a deceased family member, you’re not alone. Here’s a simplified approach to help you make informed decisions.
Should You File That Final Tax Return?
Imagine being the executor of your mother’s trust and feeling uncertain about whether you should have filed her tax return a decade ago. In this case, it’s essential to dig a little deeper into her financial records.
Check the Income Threshold
If your mother’s sole income was Social Security, it’s likely that she fell under the taxable income threshold. The IRS doesn’t require filing if income is below a certain level, so before taking any action, review her bank statements from her final years.
- Did her income increase? If the answer is yes, the next step is to consult a tax professional to understand your options.
- If her income remained low, filing a return now might not be necessary.
Estate planning expert Jennifer Sawday emphasizes that if there was no reason to file a return while she was alive, it’s probably not required now. This could save you time and stress.
Survivor Benefits: A Smart Strategy
If you’re exploring Social Security options, such as a surviving spouse looking to secure benefits, it’s vital to understand the rules that apply.
Timing Is Everything
For example, let’s say your brother-in-law, now 68 years old, lost his wife in December. He’s still working and is considering filing for survivor benefits based on her Social Security record.
- Good news: Since he’s past his full retirement age of 67, he can safely apply for survivor benefits without risking a reduction due to his current earnings.
- Importantly, he can wait to claim his own retirement benefits until he turns 70, allowing them to grow to the maximum amount.
Understand the Differences
It’s crucial to note that survivor benefits differ from spousal benefits, which are only available while a spouse is alive. If you choose to take spousal benefits, you’ll automatically also be applying for your own.
Practical Takeaways
- Keep Records Handy: Always maintain access to your loved one’s financial records for easier decision-making down the line.
- Consult with Experts: If in doubt, it doesn’t hurt to seek advice from financial or tax professionals to clarify your next steps.
- Don’t Rush: If there’s no pressing need to file, take your time to gather information and make the best choice for your situation.
Navigating financial matters after a loved one passes can be daunting, but understanding your responsibilities can lighten the load. Whether it’s handling unfiled tax returns or exploring survivor benefits, keep informed and seek support when needed.
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Bio: Priya specializes in making complex financial and tech topics easy to digest, with experience in fintech and consumer reviews.