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I eFiled our 2020 Federal return as Married, Filing Jointly. After itemizing, TT said Fed. Standard Deductions were more advantageous so I took them. On our Montana state return, TT says Married, Filing Separately is best. My husband lived two months in 2020. Dividing our income is easy because our names are on the 1099-Rs, CSA- and CSF-1099-Rs, SS income, etc. All his assets and our joint assets immediately passed to me as sole beneficiary as of 02/25/2020. Earnings from accounts we held jointly during that two months are divided 50-50. Many other things are murky to me such as the real estate taxes I paid on our jointly owned house in May, 2020. Just how picky does it get? Dividing by the number of days he lived? Some of the tax experts online say unless income and deductions are clearly in the deceased name, everything stops at death.
I am confused how to allocate our 2020 1st Quarterly Estimated Tax payment which I paid April 15, 2020. Were he still alive we would each have paid 50% of the estimate so do I deduct one month of the quarter from his return and add it to my return? There is actually very little tax owed on his earnings because Federal tax was withheld by the annuity which, of course, goes in his column so I am better off moving as much of that 1st Quarterly Estimate to my return IF it’s legal. I’ve read both the Montana publication and the one for beneficiaries from the IRS but cannot find hard and fast rules for allocating deductions and credits that would have normally come out of our joint checking account. Any words of wisdom? Thank you.
