For tax year 2020, your grandparents can still file their tax return as Married Filing Joint. A joint return needs to show the 2020 income of the deceased spouse prior to death, and all 2020 income of the surviving spouse.
In the MyInfo section, enter the information for each of them and choose to file jointly. As you go through the interview, you'll be asked if either taxpayer passed away during the year, and the date of passing. Enter that information, and then just proceed through the return, entering all the necessary information for each of them.
For tax year 2021 (the return she'll do next year), your grandmother will file either as Single, or, if she has a dependent child, as "Qualifying Widow".
I am sorry for your loss.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
