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Tax Breaks for Widows
From the editors at WIFE |
Q: I was
widowed in 1999, and a friend told me she heard there are some tax breaks for widows. Can
you help?
A: Yes. As a widow, you may file a joint return for 2000. In addition, if you still have a
dependent child at home, you may use the joint return rates for 2000 and 2001 as well. And
if you and your husband owned rental property, don’t forget that it qualifies for a
step-up in tax basis to its value at the date of his death. That means more depreciation
currently, and less taxable gain when you sell it. This also applies to other appreciated
assets, such as stock and mutual funds.
Q: When my husband died, I collected some life insurance. Should I pay off the
car, house and credit cards, or should I invest it?
A: First, set aside an emergency fund (generally three to six months’ expenses). Then
pay off your non-deductible car loan and credit card debt. If the interest rate on your
home mortgage is less than you can earn on investments (about 8-10%), keep the loan and
invest your money for income or long-term growth, depending on your needs.
Q: I am a 62-year-old widow and I am collecting social security
benefits based on my deceased husband’s earnings. I’d like to remarry, but I
don’t want to lose those benefits. A friend told me that happened to her mother. Is
that true?
A: Fortunately, your benefits will continue even after you remarry. In the bad old days,
widows did lose their benefits upon remarriage, so a lot of seniors began living together
instead. Congress mended that rip in our nation’s moral fabric in 1984.
Q: My husband died recently. He never discussed his financial affairs with me,
but he always told me I’d be taken care of. I think he meant there was life
insurance, but I don’t know what life insurance policies he owned. How can I make
sure I’ve collected all the insurance benefits due me?
A: Write to the American Council of Life Insurance, Policy Search Dept., 1001 Pennsylvania
Ave., NW, Washington, DC 20004. Request a missing policy search form and enclose a
legal-size self-addressed, stamped envelope. When you return the complete form, they will
send it to the life underwriters who are members of the Council. Those companies will
search their files to see if your husband was covered by a life insurance policy issued by
them. This search will take about three months.
The Women's Institute for Financial
Education (WIFE) is a non-profit organization which provides financial education,
networking opportunities, seminars, and workshops for women of all ages. |
