If an individual passes away and leaves behind an IRA account, what deduction may the widow qualify for?

If an individual passes away and leaves behind an IRA account, what deduction may the widow qualify for?

• A. Joint Tax Deduction
• B. Marital Deduction
• C. Dependent Deduction
• D. Retirement Contribution Deduction

Answer: (B)

The widow may qualify for the marital deduction. This is a provision in the tax code that allows an individual to transfer assets to their spouse without incurring gift or estate tax at the time of the transfer. When an individual passes away, any assets passing to the surviving spouse can typically qualify for this deduction, thereby reducing the overall value of the deceased spouse's estate for tax purposes. The marital deduction is particularly relevant in the context of inheriting retirement accounts like IRAs, as the surviving spouse can generally roll over the IRA into their name, allowing for continued tax-deferred growth. Other options do not apply in this scenario. The joint tax deduction typically refers to tax benefits available to couples filing jointly, rather than deductions directly related to inheritances. The dependent deduction refers to exemptions related to dependents, and the retirement contribution deduction typically involves contributions made to retirement accounts during a tax year rather than inheritance situations. The specifics of each option clarify the application of tax rules in estate matters and demonstrate why the marital deduction is the proper response.

The widow may qualify for the marital deduction. This is a provision in the tax code that allows an individual to transfer assets to their spouse without incurring gift or estate tax at the time of the transfer. When an individual passes away, any assets passing to the surviving spouse can typically qualify for this deduction, thereby reducing the overall value of the deceased spouse's estate for tax purposes.

The marital deduction is particularly relevant in the context of inheriting retirement accounts like IRAs, as the surviving spouse can generally roll over the IRA into their name, allowing for continued tax-deferred growth.

Other options do not apply in this scenario. The joint tax deduction typically refers to tax benefits available to couples filing jointly, rather than deductions directly related to inheritances. The dependent deduction refers to exemptions related to dependents, and the retirement contribution deduction typically involves contributions made to retirement accounts during a tax year rather than inheritance situations. The specifics of each option clarify the application of tax rules in estate matters and demonstrate why the marital deduction is the proper response.