My spouse was 58 years old when he suddenly passed in May 2009. He was self-employed as an independent contractor and took business deductions in addition that our income allowed for itemized deductions. I am not employed, also 58, will not be eligible for SS until 60 1/2, have no other income other than from investments. This is the last year I am able to file jointly. My spouse always did the income tax. He took the 2008 ad valorem (property tax on our personal residence-@$10,000) which he paid on Jan 2, 2009. My question is, should I also pay the 2009 ad valorem taxes before Jan 1, 2010 to include on this year's taxes? Will I be stuck next year without the ability to make itemized deductions because I am not working and lose the deduction to my property taxes? Also will I lose the $3,000 yearly carry-overs of long term capital losses?

1) My question is, should I also pay the 2009 ad valorem taxes before Jan 1, 2010 to include on this year's taxes?
If you do pay these taxes before Jan 1, 2010 you would be entitled to deduct these expenses on the 2009 tax return. Clearly, it would be smart to do so as it enable you to have a greater itemized deductions.

2)Will I be stuck next year without the ability to make itemized deductions because I am not working and lose the deduction to my property taxes?
Actually, you would be entitled to file married filing joint for 2 more years as a qualified widower. The standard deduction in 2009 is $11,400, for married taxpayers filing jointly and surviving spouses. Thus, your itemized deductions need to exceed this amount in order for you to itemized. It does not matter whether you work or not, as long as you pay the mortage interest, property taxes and state income taxes and these exceed $11,400 for 2009 you would be entitled to itemize on your tax return.

3) Also will I lose the $3,000 yearly carry-overs of long term capital losses?
No, you wil not lose the $3,000 yearly carry over of long term losses as these will continue until they are fullly used or absorbed by other long term gains.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.