The tax breaks offered to qualify widow(er)s include a lower tax rate, a higher standard deduction, and some potentially beneficial tax treatment in regard to some investments.
Filing a Married Filing Separately Return
This still may be the best choice for you depending how much income your spouse earned before he died (assuming he had earned income the year of his death). But if he died early in the year, filing a Married Joint Return may now be to your advantage.
Although there are no additional tax breaks for widows, using the qualifying widow status means your standard deduction will be double the single status amount. Unless you qualify for something else, you'll usually file as single in the year after your spouse dies.
If one spouse passes away, the surviving spouse could pay nearly double the amount of income taxes. Are you planning for this? The “widow's penalty” occurs when a person's tax filing status goes from married filing jointly to single.
The standard deduction and tax tables are the same for Qualifying Widow(er) and Married Filing Jointly filing statuses. These are more favorable than those for Head of Household filing status.
Less Income, More Taxes
Simply put, the widow's penalty is when a surviving spouse ends up paying more taxes on less income after the death of their spouse. This happens when a widow or widower starts filing as a single filer in the year after their spouse's death.
After a spouse dies, the survivor often ends up paying higher taxes on less income — something known by accountants and financial planners as the “widow's penalty,” because women typically outlive their husbands.
The “widow's penalty” refers to the financial disadvantages that widows often face after the death of their partners. This penalty manifests in various forms, from reduced Social Security benefits to inflated Required Minimum Distributions (RMDs) to potential estate tax issues.
You can file taxes as a qualified widow(er) for the year your spouse died, as well as two years following their death. So, depending on the timing of when the spouse passed during the year, this time frame could technically be three calendar years.
If my spouse dies, am I held responsible for their unpaid taxes? Since each spouse is held individually liable for taxes based on filing a joint return, the death of one spouse will not theoretically affect the surviving spouse's liability for unpaid taxes.
Widow or widower, age 60 or older, but under full retirement age, gets between 71% and 99% of the worker's basic benefit amount. Widow or widower, any age, with a child younger than age 16, gets 75% of the worker's benefit amount.
The widow(er)'s insurance benefit rate equals 100 percent of the deceased worker's primary insurance amount plus any additional amount the deceased worker was entitled to because of delayed retirement credits. (See §720.)
Surviving spouse, full retirement age or older — 100% of the deceased worker's benefit amount. Surviving spouse, age 60 — through full retirement age — 71½ to 99% of the deceased worker's basic amount. Surviving spouse with a disability aged 50 through 59 — 71½%.
While individuals cannot deduct funeral expenses, eligible estates may be able to claim a deduction if the estate paid these costs. However, if your estate is below the $12,060,000 federal estate tax exemption limit (2022 tax year), you cannot use this deduction.
The standard deduction amounts for 2023 are: $27,700 – Married Filing Jointly or Qualifying Surviving Spouse (increase of $1,800) $20,800 – Head of Household (increase of $1,400) $13,850 – Single or Married Filing Separately (increase of $900)
Head of household (HOH) filing status allows you to file at a lower tax rate and a higher standard deduction than the filing status of single.
If you file a return and claim a refund for a deceased taxpayer, you must be: A surviving spouse/RDP. A surviving relative. The sole beneficiary.
The IRS considers the surviving spouse married for the full year their spouse died if they don't remarry during that year. The surviving spouse is eligible to use filing status "married filing jointly" or "married filing separately." The same tax deadlines apply for final returns.
A widow may be able to collect Social Security from a spouse provided the spouse earned enough work credits for surviving loved ones to qualify for survivor benefits. A widow must also be 60 or over, or 50 or over and disabled, or must be raising a minor child of the deceased person.
The term “married” encompasses all married people, including those separated from their spouses. “Unmarried” includes those who are single (never married), divorced, or widowed.
Even though your marital status doesn't affect eligibility, it could impact the cost of your Medicare Part A monthly premium. Most individuals qualify for premium-free Part A because they've worked and paid Medicare taxes for at least 10 years (40 quarters).
For the 2020 tax year, qualifying widow(er)s are required to file a federal income tax return if they are: Younger than 65 with a gross income of at least $24,800. 65 years or older with a gross income of at least $26,100.
If you were married on the last day of the year, then you cannot file as single. However, you can file as Married Filing Separately instead of filing a joint return with your spouse.
One effective way to mitigate the effects of the widow's tax penalty is through careful tax planning. In addition to married or single, there are other filing categories. If specific requirements are met, filing as a qualifying widow(er) for two years post-death is more beneficial than filing as a single individual.