What Tax Breaks Are Afforded to a Qualifying Widow?

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What Tax Breaks Are Afforded to a Qualifying Widow?

Each tax year, the Internal Revenue Service (IRS) provides U.S. tax filers with five filing status choices to select from:

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Widow(er) with dependent child who qualifies

The eligible widow(er) with dependent child status provides many advantages to those who have lost a spouse and have a kid. The tax incentives available to qualified widow(er)s include a reduced tax rate, a bigger standard deduction, and possibly advantageous tax treatment for some assets.

Key Takeaways

  • Qualifying widow(er) status is an unique filing status offered to surviving spouses for two years after their spouse’s death.
  • The appropriate tax rates and tax brackets for married filing jointly and qualified widow(er) statuses are the same.
  • In general, the qualifying widow(er) status entitles a widow(er) to the same tax rates as a married filing jointly status for two years after the death of their spouse if they stay single.
  • The standard deduction for married filing jointly and qualified widow(er) is likewise larger than for other tax statuses.

Qualifying Widow(er) Rates and Requirements

A surviving spouse may utilize the qualified widow(er) status for two years following a death if they stay unmarried. The widow(er) must employ either the married filing jointly or the filing separately status for the year of death. The qualifying widow(er) status is not available until the next year. An person may pick the status that results in the lowest tax payments for the two years after the death.

In the year of their death, a dead person’s income is liable to federal income tax. As a result, during the year of death, married filing jointly required income from both spouses. If the widow(er) wishes to file jointly, they must also make tax filing arrangements for their dead spouse. If the dead spouse owes an individual income tax refund, the executor may file IRS Form 1310, Statement of a Person Claiming Refund Due a Deceased Taxpayer.

  Tax Accounting Definition

If a widow(er) remarries in the year of their spouse’s death, special conditions apply. Remarriage in the same year after a death necessitates the widow(er) filing as married filing jointly with their new husband or married filing separately. In either case, a married filing separately tax return for the dead spouse would be required.

The following are the 2019 tax rates for couples filing jointly and qualified widow(er):

Image by Sabrina Jiang © Investopedia2020

The following are the 2019 tax rates for couples filing separately:

Image by Sabrina Jiang © Investopedia2020

To file as a widow(er) in 2019, a person must fulfill the conditions outlined in the IRS’s “Publication 17, Your Federal Income Tax.” The following are the primary requirements:

  • The spouse died in 2018 or 2017, and there has been no remarriage.
  • A dependent child, stepchild, or adoptive child is required.
  • An person may demonstrate that they were financially responsible for more than half of the expenditures of the house in which they and their dependent kid resided.

If a person decides to utilize the qualified widow(er) status, it is also vital to be aware of the income levels that necessitate a tax filing. An person petitioning for widow(er) status must have the following income for the two years after the death:

  • $24,400 if younger than 65
  • $25,700 if older than 65

If your income falls below certain thresholds, you do not need to file a tax return in most situations, although it may be helpful if certain credits are available.

Benefits of the Qualifying Widow(er) Status

The tax advantages for an eligible widow(er) may be substantial. The tax brackets and rates for married filing jointly and qualified widow(er) are the same. In general, this entitles the widow(er) to married filing jointly rates for the next two years after the death if they stay single.

  Charitable Contributions: Tax Breaks and Limits

In addition, the married filing jointly and widow(er) statuses have the biggest standard deduction of any tax status. The standard deduction for married filing jointly and widow(er)s under the age of 65 in 2019 is $24,400. The standard deduction rises by $1,300 for everyone over the age of 65, to $25,700.

Qualifying widows and widowers may also be eligible for special tax benefits on their investments. This may apply to joint investments with a dead spouse. For example, if a widow(er) and spouse own rental property, they may be eligible for a tax step-up in basis. This might result in more depreciation allowances and smaller taxable profits if the property is sold.

Other assets, such as stock shares that a widow(er) gets as the beneficiary of a dead spouse’s estate, are normally subject to the step-up in basis. Widow(er)s may also notice changes in the amount they may contribute to retirement vehicles as well as changes in their eligibility for certain tax benefits.

More information about filing a Form 1040 with widow(er) status may be found in the IRS’s “Publication 17, Your Federal Income Tax.”

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