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Determining your tax filing status after the death of a spouse

Choosing the wrong status can make a difficult time even more stressful.
By Matthew Boelter, Senior Director of Financial Planning

The death of a loved one can be a time of great grief and emotional pain, which is only exasperated when there are complex and oftentimes looming financial obligations left for the surviving spouse to deal with.

One of those unavoidable obligations is filing income taxes. Thankfully, the IRS has some accommodations in place that can help lessen the financial burden, but only if you know which filing status to select.

This is important because your filing requirements, tax rate, standard deductions and eligibility for certain tax breaks are determined by the filing status you choose, and as a widow, or widower, you’ll want to select the status that ensures your tax bill is as low as possible.

Options for surviving spouse filing status

Let’s take a look at some of the different options you can use, depending on your eligibility, for your tax filing status after the death of a spouse.

Married filing jointly

Even though your spouse has passed away, the IRS still allows you to select the married filing jointly option, but only for the tax year in which they died. The exception would be if you remarried the same year in which your spouse passed, which we’ll cover in a moment.

The advantage of selecting this filing status is that you will get a higher standard deduction than if you were to choose married filing separately. As of 2022, that means a deduction of $25,900 as opposed to only $12,950.

This option also allows for higher income thresholds in each tax bracket. For example, in 2022, the 24% tax bracket for a married individual filing separately starts at $89,076 and is capped at $170,050, after which you jump to the 32% tax bracket. However, for married filing jointly, the 24% bracket starts at $178,151 and goes as high as $340,100 before jumping to the 32% bracket.

This means your income can be twice as high while staying in the 24% tax bracket when you file jointly, which can result in significant tax savings.

Qualified widow(er)

This designation can be used in the two years after your spouse passes, but not in the actual year they passed, as long as you meet the following requirements.

  • You are entitled to file a joint return for the year your spouse died, even if you didn’t actually file a return.
  • You don’t remarry before the end of the year in which you are filing.
  • You have at least one child you can claim as a dependent. This can be a stepchild or an adopted child, though a foster child does not qualify.
  • Your qualified dependent child lives in your home all year, except for temporary absences.
  • You paid more than half of the costs to maintain your home. This home must also be the main residence for your dependent child during the year.

The advantage of using the qualified widow(er) filing status is that the standard deductions and tax brackets are the same as for married filing jointly, and thus, more likely to lower your tax liabilities than using either the married filing individually or head of household options.

What if you remarry?

If you get remarried in the same year as your spouse passes, you won’t be able to use the married filing jointly status with your deceased spouse. However, you will be able to use the married filing jointly status with your new spouse. And if a tax return is still required for your deceased spouse, it can be filed on their behalf using the married filing separately designation.

Single filing status

If you don’t remarry and can’t meet the requirement to file as a qualified widow(er), you’ll usually have to file your taxes using the single status in the year after your spouse passes. The exception to this would be if you have a foster child, in which case you would likely file as head of household.

The loss of a spouse can be a devastating event, and although there is no way to lessen the emotional impact, having a comprehensive financial plan in place before tragedy strikes can help to lessen the financial impact. If you’ve experienced the loss of a spouse and have questions about your filing options, or just want to review your financial plan to make sure it’s up to date, contact an Edelman Financial Engines advisor today. We’re here to help.

 

Neither Edelman Financial Engines, a division of Financial Engines Advisors L.L.C., nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

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