My husband died two month ago. In the past we always paid our estimated taxes based on our taxes from the previous this year. That way we didn’t have to worry about paying a penalty if we underestimated them and if we overestimated them the surplus would be credited to our taxes for the following year.
I paid the first two quarters of estimated taxes based on that formula while my husband was still alive but I am not sure about what to do about the the third quarter for a few reasons. Last year my husband received pension checks from when he was a crime lab director for the entire year but this year he only received them for five months because that benefit ended when he died. Last year both of us received social security checks for the entire year but this year he only received them for five months. Last year we had capital gains but this year I sold a limited partnership he had in an energy company at a significant loss because it owns the keystone pipeline. Consequently, its outlook was grim. Since I sold it while he was still alive the cost basis will be what he paid for it a number of years ago. In addition, after my husband exhausted his Medicare benefit for the skilled nursing facility I had to pay 13,000 a month for it and that is tax deductible.
This is my question. If I pay the other two quarters of estimated taxes based on last years taxes I will definitely overpay. Since for this year I will be filling taxes as the surviving spouse of a married couple and next year I will be filing taxes as a single person will an overpayment from this year for both of us be able to be applied to my taxes as a single person next year. If not would his name be included in a refund check because if that happens I won’t be able to deposit it.
I called my accountant to ask him these questions but he is on a medical leave so I won’t be able to ask him before the September estimates are due.
So sorry that you lost your husband. Unfortunately my wife has a disease which will make me a widower someday, too. It’s not nice.
Did you not have a joint bank account with your late husband? If so keep it open the way it is, don’t retitle it. Just take the refund electronically, the ACH deposit slides in, no one endorses anything. We haven’t had a paper check refund in two decades?
I don’t have any idea how much money you’re talking about, and so I don’t know if it’s worth getting additional professional help. But if your accountant doesn’t have an assistant or someone who can cover for him while he’s out, you could ask another accountant for an opinion.
If it were me, I’d probably just lower the September payment by some percentage that seems reasonable. Then you still have the January payment to get it close to correct.
If you’re not strapped for cash, then paying as normal is the simple way to handle it. You won’t have any trouble getting the overpayment credited to next year.
As far as deposits go, I never closed my joint checking account when my wife died (I didn’t do a lot of things tbh) so when I got various Refunds for taxes and the like with her name on the checks I just deposited them. They can show up years later. Just be aware that there are specific rules about checks from the US Treasury. If one spouse signs they both have to sign — so don’t sign it. I can’t imagine how hard it would be to get them to reissue a check. Of course if it’s electronic it will just go.
Btw you’ll file this year as married then the following two years as a qualifying widow (which for all intents and purposes is the same as married filing jointly) so you have some time to take advantage of that tax bracket if you want to do things like convert IRAs to Roths etc.
I’m late to this thread, but a few notes from handling finances for my mom when dad died, some just reaffirming what others have said;
Don’t be in a rush to close down accounts in your husband’s name. There will be some odd checks that come in with his name for a year or two that you won’t know or think about, eg, for my mom one was a annual refund for being a long time member of an electric coop.
You’ll file as MFJ for TY2022. You’ll indicate that your spouse passed away in 2022 and your name should be on any refund check (but as others point out just get a direct deposit if you can).
You only file as a qualifying widower for TY2023 and TY2024 if you still have dependents such as a child at home, otherwise you’ll be filing as single unless you remarry.
It is a personal choice if you overpay and trust the government to give your money back, or possibly underpay and get a penalty. Penalties are never fun, but the underpayment penalty is not egregious and scary. Let the government calculate it and send you the bill. If you are going to spitball and and not do exact calculations, I think part of the penalty rule is around 90% of prior year’s taxes, so you could plan, I think (?) to pay 90% of last year’s tax amount and be safe from any penalty. Personally, I set up my own spreadsheet to keep track of estimated tax due through the year, but that may be beyond most people. I don’t like to overpay and prefer to manage things so I’m due only a small refund.
You may also owe state-level estimated taxes depending on what state you live in.
If you like your accountant and they just happened to be unavailable for the 9/15 tax deadline but will be back soon, that’s fine, if not you might want to find another CPA. I’ve never used one (actually mom used one and they messed things up) but i would hope they would be able to a) help you with estimated taxes through the year, as well as b) some tax planning; you may be able to find some capital gains to harvest and net against your capital loss.
will an overpayment from this year for both of us be able to be applied to my taxes as a single person next year.
I believe so. The IRS seems to know about marriage and the primary filer’s SSN vs the spouse’s SSN. A TY2022 MFJ overpayment should be available to apply to your TY2023 taxes. The best bet is probably just to get the TY2022 refund direct deposited though and handle TY2023 taxes separately.
If not would his name be included in a refund check
It shouldn’t be if you/CPA do the 1040 correctly.