IRS Surviving Spouse Tax Rules: Portability and Inherited IRAs

If your spouse has died, the IRS surviving spouse tax rules give you several specific breaks: you can file a joint return for the entire year of death, keep joint-return tax brackets for up to two more years if you have a qualifying child, roll your spouse’s retirement account into your own name, inherit most assets with a stepped-up basis that erases decades of capital gains, and carry over any unused portion of your spouse’s federal estate tax exclusion. Each one has its own eligibility test and deadline, and missing a deadline can be expensive.

Filing the Return for the Year of Death

For the tax year in which your spouse died, you can file a joint return covering the full calendar year, provided you have not remarried before December 31.¹ Married Filing Jointly gives you the lowest rates and the highest standard deduction. For 2026, the MFJ standard deduction is $32,200, compared with $16,100 for a single filer.²

The joint return combines your spouse’s income and deductions through the date of death with your own income and deductions for the full year. Because the MFJ brackets are roughly twice as wide as the single-filer brackets, pooling the income almost always produces a lower total tax than filing separately.²

The tradeoff is joint and several liability. By signing a joint return, you become responsible for the entire tax on it, including any deficiency the IRS later finds on audit, and that liability extends to your spouse’s income, deductions, and credits.³ If your spouse’s financial records are incomplete or you suspect unreported income, Married Filing Separately walls off that exposure at the cost of higher rates and a smaller standard deduction. For most surviving spouses, filing jointly is still the right choice.

Signing the Return

Write “DECEASED,” the decedent’s name, and the date of death across the top of the Form 1040.⁴ If you are filing jointly, list both names in the name and address block. Sign the return yourself and write “Filing as surviving spouse” in your spouse’s signature line.⁵ Do not attach a death certificate. The IRS says to keep it in your records and provide it only on request.

The deadline is April 15 of the following year, the same as any other individual return. Form 4868 extends the filing deadline to October 15 but does not extend the time to pay. Interest and late-payment penalties accrue on unpaid balances from April 15.

The Two-Year Qualifying Surviving Spouse Window

The joint-rate benefit does not vanish the day the final return is filed. For the two tax years after the year of death, you may qualify for a transitional filing status the IRS calls Qualifying Surviving Spouse. It gives you the same standard deduction and the same rate brackets as Married Filing Jointly, even though you are no longer filing a joint return.⁶

Three conditions must all be met for each year you claim it:

You have not remarried before the end of the tax year.
You have a child, stepchild, or adopted child who qualifies as your dependent for that year.⁶
You pay more than half the cost of keeping up the home where that dependent child lives with you for the entire year, aside from temporary absences like school or vacation.⁶

If your spouse died in 2025, you file a joint return for 2025, then use Qualifying Surviving Spouse status for 2026 and 2027 if you still meet the tests. Starting in 2028 you move to Head of Household if a qualifying dependent remains, or to Single if not. Head of Household carries a $24,150 standard deduction for 2026, below MFJ but well above the single-filer amount.²

This window is one of the most overlooked provisions for surviving spouses with children. The savings against Single filing can run into thousands of dollars a year.

Inherited Retirement Accounts

Surviving spouses get options for inherited IRAs and 401(k)s that no other beneficiary receives. The right choice depends on your age, whether you need the money soon, and how long you want to defer tax on future growth.

Rolling the Account Into Your Own Name

The most common approach is to roll the inherited account into your own IRA or employer plan. Once you do, you become the account owner. Everything then follows your rules: your Required Minimum Distribution schedule based on your age, your beneficiary designations, and your early withdrawal penalties.⁷

That last point matters. If you roll the account over and then take money out before age 59½, you generally face a 10% early withdrawal penalty on top of income tax. For a surviving spouse in their 40s or 50s who may need these funds, the rollover can be the wrong move.

Staying as Beneficiary of an Inherited IRA

The alternative is to keep the account titled as an inherited IRA. Distributions from an inherited account are exempt from the 10% early withdrawal penalty regardless of your age.⁸ You will still owe ordinary income tax on withdrawals from a traditional account, but avoiding the 10% penalty is a real advantage if you are younger than 59½.

As a spousal beneficiary who stays on the inherited account, you can delay Required Minimum Distributions until the year your spouse would have reached the applicable RMD age, currently 73.⁹ If your spouse was younger than you, that delay can be meaningful.

SECURE 2.0, passed in late 2022, added further flexibility. A surviving spouse who stays on as beneficiary can elect to be treated as if they were the original account owner for RMD purposes, which lets them use the more favorable Uniform Lifetime Table and produces smaller required withdrawals.¹⁰ The election applies automatically when the account holder died before their Required Beginning Date and the surviving spouse is the sole beneficiary; when the holder died on or after that date, the election is available but is not automatic.

None of these spousal options apply to non-spouse beneficiaries. An adult child or sibling who inherits a retirement account must generally empty it within 10 years of the owner’s death.⁷

Inherited Roth IRAs

Distributions from an inherited Roth IRA are generally tax-free as long as the account has been open at least five years, measured from when the original owner first funded any Roth. If that test is met, you can take distributions without owing income tax, whether you roll the Roth into your own name or keep it as an inherited account.⁷

Health Savings Accounts

If your spouse named you as the beneficiary of their HSA, the account becomes yours. As long as you use the funds for qualified medical expenses, you owe no tax or penalty. The rules are far harsher for anyone else. If a non-spouse was named, or no beneficiary was designated, the account stops being an HSA and its full fair market value becomes taxable income to the recipient in the year of death.¹¹ An outdated or missing beneficiary form on an HSA is an expensive mistake.

Stepped-Up Basis on Inherited Property

When you inherit non-retirement assets such as real estate, stocks, or a brokerage account, their tax basis resets to fair market value on the date of your spouse’s death.¹² If your spouse bought stock for $50,000 that was worth $300,000 at death, you inherit it with a $300,000 basis. Sell it the next day for $300,000 and you owe zero capital gains tax on the $250,000 of appreciation that occurred during your spouse’s lifetime.¹³

How much of the asset gets the step-up depends on where you live. In the roughly nine community property states, both halves of community property receive the stepped-up basis when one spouse dies, so the entire asset resets.¹⁴ In separate property states, only the deceased spouse’s ownership share steps up. If you and your spouse each owned half of an investment, your half keeps its original basis and only the inherited half resets. For couples in community property states holding assets with large unrealized gains, the full step-up is one of the biggest tax benefits available at death.

Income in Respect of a Decedent

Not everything your spouse earned goes on the final joint return. Income that your spouse had a right to receive but had not actually collected before death is called income in respect of a decedent (IRD). Common examples include unpaid salary, accrued interest, distributions from traditional retirement accounts taken after death, and deferred compensation payments.

IRD does not get a stepped-up basis the way a stock or a house does. Whoever receives the income pays income tax on it in the year they collect it, at their own rate.¹⁵ If the income flows to you as surviving spouse, it goes on your return. If it flows to the estate first, it appears on the estate’s income tax return and then passes through to you on a Schedule K-1.

One partial offset exists. If the estate was large enough to owe federal estate tax and IRD items were included in the taxable estate, the recipient can claim an itemized deduction for the portion of estate tax attributable to those items.⁴ Without it, the same dollars would be hit by both the estate tax and the income tax.

Estate Tax Portability

Federal estate tax only reaches the wealthiest estates. For deaths in 2026, the exclusion is $15 million per individual, up from $13.99 million in 2025 after passage of the One, Big, Beautiful Bill, with a top rate of 40% on amounts above that line.¹⁶

Even if the estate is nowhere near $15 million and owes no tax, there is still a reason to file the federal estate tax return (Form 706): portability. Portability lets you add whatever portion of your spouse’s $15 million exclusion they did not use to your own lifetime exclusion. For a couple where the first spouse to die used none of their exclusion, portability roughly doubles the surviving spouse’s shelter.¹⁶

How to Elect Portability

The executor must file a complete Form 706 to make the election. The normal deadline is nine months after the date of death, with an automatic six-month extension available. If the estate was not otherwise required to file Form 706 (because the gross estate plus adjusted taxable gifts was below the exclusion) and missed that window, a simplified late-filing procedure allows the election up to five years after the date of death.¹⁷ To use the relief, the executor writes “FILED PURSUANT TO REV. PROC. 2022-32” across the top of the late-filed return. The five-year window is a safety net, not a planning strategy; filing promptly locks in the amount.

Remarriage and the Last Deceased Spouse Rule

If you remarry and your new spouse later dies, portability only lets you use the unused exclusion from your most recently deceased spouse. The unused amount from your first spouse disappears. A surviving spouse who remarries and then loses a second spouse with a smaller unused exclusion can end up with less total shelter than before. Couples with substantial wealth sometimes use credit shelter trusts rather than relying on portability for this reason.

Some states impose their own estate tax at thresholds well below the federal level, with exemptions as low as $1 million. State estate tax returns have separate deadlines, and state-level portability is rare. If the estate has any chance of exceeding your state’s threshold, that filing deserves attention alongside the federal Form 706.

Deducting Final Medical Expenses

Medical bills do not stop when someone dies. If you pay your spouse’s medical expenses out of the estate within one year of the date of death, you can elect to deduct those expenses on the decedent’s final income tax return rather than claiming them on Form 706.⁴ For most families the income tax deduction is more valuable, because the estate tax exclusion is so high that most estates owe no estate tax at all.

To make the election, attach a statement to the return confirming that the expenses have not been claimed on Form 706 and that the estate waives the right to claim them there. The expenses still have to clear the normal itemized deduction rules, so they only help to the extent they exceed 7.5% of adjusted gross income on the final return.

Estimated Tax Payments in the Following Year

Any estimated payments you and your spouse made during the year of death apply to the joint return for that year. Starting the next year, you are filing as an individual, and your withholding picture may look very different, especially if your spouse was the higher earner or the one with employer withholding.

If you expect to owe $1,000 or more in tax after subtracting withholding and credits, you will need to make quarterly estimated payments.⁴ For 2026 the due dates are April 15, June 15, September 15, and January 15 of the following year. Missing them triggers underpayment penalties, and the IRS does not waive them for recent bereavement.

1
Internal Revenue Service. Filing Status
2
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Office of the Law Revision Counsel. 26 USC 6013 – Joint Returns of Income Tax by Husband and Wife
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Internal Revenue Service. Publication 559 (2025), Survivors, Executors, and Administrators
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Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
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Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent – Section: 1014(b)(6)
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Office of the Law Revision Counsel. 26 USC 691 – Recipients of Income in Respect of Decedents
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Internal Revenue Service. What’s New – Estate and Gift Tax
17
Internal Revenue Service. Revenue Procedure 2022-32