What Is a Widow(er)'s Exemption?
Let me explain what a widow(er)'s exemption really is—it's a tax break that cuts down on the taxes you face after your spouse dies. You should know that state laws differ, but they usually give you, the surviving spouse, a tax cut for a set time to help with the financial hit from losing your partner. On the federal side, you get relief from taxes on estates and inheritances, which can make a big difference for you and your dependents.
How It Works
Here's how this exemption operates in practice. At the state level, you often see it as a drop in property taxes for a while—take Florida, where you get a $5,000 cut in the property's taxable value, and it sticks around until you remarry. Federally, you can file joint tax returns for two years after your spouse's death year, and you benefit from a stepped-up basis on inherited property, meaning the value resets to the date of death for tax purposes when you sell it. If you sell your home within two years and meet the rules, you can exclude up to $500,000 in profit from taxes.
IRS Policy on Same-Sex Marriage
You need to understand the IRS stance on same-sex marriage for this exemption. Since Section 3 of DOMA was struck down in 2013, the IRS recognizes same-sex marriages as legal for federal tax purposes, so you qualify for these benefits if you're legally married. But if you're in a domestic partnership or civil union, even if your state recognizes it, you won't get the federal tax breaks—marriage is required.
Special Considerations
There are some key points you should consider. The federal estate tax exemption for 2024 is $13.61 million, and assets passed to you as a spouse are fully exempt, but this applies more to non-spouse heirs. If your partner dies and you're not legally married, you don't qualify—no matter how long you've been together. Also, survivor's benefits from Social Security might be taxable as income, so factor that in.
Key Takeaways
- The exemption eases your tax load after a spouse's death via state property tax cuts and federal estate relief.
- You must be legally married to qualify; domestic partnerships don't count.
- Federal perks include joint filing, basis adjustments, and estate exemptions up to $13.61 million in 2024.
- State benefits vary, like perpetual property tax reductions until remarriage in some places.
The Bottom Line
In the end, the widow(er)'s exemption is there to lighten the tax burden you face after losing a spouse, with states focusing on property taxes and the federal government handling estate taxes. Make sure you're legally married to access it, as that determines your eligibility.
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