It’s that time of year, and tax forms have likely been piling up at your door. If you’re a widow, there are a couple things to keep in mind as you get ready to file for your federal taxes. So let’s go through those right now.
To be clear: this is only general information I’ve learned about federal taxes. It isn’t intended to be tax advice for your specific situation. Rather, this is a broad look at some of the major tax-time topics that may apply to widows. I’m not a tax preparer, and if you need help with your return, you may be able to get free assistance through the Volunteer Income Tax Assistance Program.
Your filing status
You may be single now, but that doesn’t necessarily mean you should be using the single filing status for your income taxes. Depending on when your spouse died and whether you have kids, multiple filing statuses could apply to your situation.
Why does your filing status matter?
Because it dictates the size of your standard deduction – that is, it determines how much of your income is tax-free. Here are the standard deductions for 2015:
- Single: $6,300
- Married, filing jointly: $12,600
- Married, filing separately: $6,300
- Head of household: $9,250
- Qualifying widow(er): $12,600
In addition to determining your standard deduction, your filing status dictates how your tax brackets are set up. For example, single filers get bumped out of the 10 percent bracket and into the 15 percent bracket once they earn more than $9,225. However, head of household filers stay in the 10 percent bracket until they hit $13,150.
You may wonder why that matters for you if make a lot more than those numbers, but remember your taxes are graduated. That means that even if you’re in the 33 percent tax bracket, all your income is not taxed at the 33 percent rate. Some of it may be taxed at a lower rate. Forbes has some good charts demonstrating how this works. Check them out.
But on to the nitty-gritty. Here’s how to get the maximum deduction:
If your spouse died last year in 2015: First, my sympathies. I know this is all very fresh for you still. If your spouse died at any time in 2015, you can still file using the married status. I don’t have any experience with filing separately, but if you file jointly, you do everything the same as you would any other year. You claim any income, deductions or credits your spouse may have earned while still alive. The only difference is you need to note his date of death.
If your spouse died in 2013 or 2014 and you have dependent children: If you have dependent kids at home, the government lets you keep the same standard deduction you had when you were married. Or at least you get to keep it for two years (because apparently it becomes magically less expensive to raise kids alone after two years??). However, you do need to change your filing status to Qualifying Widow(er). The deduction for this status is the same as that of married filers.
If your spouse died in 2012 or earlier and you care for a dependent: While the government only lets you use the Qualified Widow(er) status for two years, I guess they partially make up for that by letting you file as a Head of Household after that. The Head of Household status has a better deduction than that for singles and is available to any unmarried person who pays half a household’s expenses and has dependent children or who is supporting someone such as an elderly parent. The only catch for non-children is that you have to be able to claim the person you’re supporting as an exemption on your taxes to be eligible for the filing status. So even if you are taking care of Mom and Dad, you can’t use Head of Household unless they are an exempted person listed on your income taxes.
If your spouse died in 2014 or earlier and you have no dependents: Unfortunately, the government doesn’t give a lot of love to widows who don’t have children at home or other dependents. If you fall into this category, filing single is regrettably your only option.
Your Social Security
Now, let’s talk about Social Security.
We’ll start with the Social Security payments your kids may be getting. You do NOT have to claim this money on your tax form. You may be deciding how that money is spent, but it’s not your money. It’s theirs. And so any taxes due would be owed by them.
There’s a possibility some of their Social Security benefits will be taxable if they have a job. However, this is probably only likely if you have an older teen who is working near full-time hours. That’s because you can have a base income of up to $25,000 before any Social Security benefits are subject to tax.
That base income amount is calculated by adding half your Social Security benefits to whatever income you earned.
So let’s say your child gets $10,000 in Social Security benefits for the year. They would have to earn more than $20,000 ($25,000 minus half the Social Security benefit) in order for their benefits to the taxed. If they get $20,000 in benefits, they would need to earn more than $15,000 for it to be taxable. And so on and so forth.
The same goes for any benefits you receive. Social Security is not taxable at all until you exceed that $25,000 base income amount.
Why you should file even if you don’t have to (and why you may want to get a job)
This last section is specifically for those of you who either don’t work or don’t make enough to warrant filing for taxes.
If you earn less than your standard deduction (those would be the amounts listed in the first section above), the law doesn’t require you to file for taxes. There’s no need to since none of your income is taxable.
However, you could be leaving a lot of money on the table if skip filing a return. The Earned Income Tax Credit (EITC) gives refundable tax credits of up to $6,242 for low-income earners.
Here’s what that means: the government could send you a check for more than $6,000 even if you don’t owe anything or haven’t paid a cent of taxes. It’s a controversial credit in some circles, but it’s available and so I think anyone eligible should claim it.
The first catch is that you have to file a tax form to claim the credit. If you don’t file because you’re not required, you could be missing out on a boatload of money.
The second catch is that you have to have an earned income to be eligible for the EITC. That means if you’re living solely off your husband’s Social Security so you can stay home with the kids, you’re not eligible.
Nothing is more important than providing your kids with stability so I won’t tell anyone to put the kiddos in day care and go get a job. That said, if you can sell Tupperware on the side, deliver pizzas one evening a week or pick some work during school hours, you may open up the possibility to get a windfall at tax-time.
The IRS website has all the details on the income limits and credit amounts available for the 2015 EITC. If you’re not sure if and how getting a job could affect your Social Security, I strongly encourage you to talk with a tax professional before doing anything else. Finally, keep in mind that Congress can and does change tax laws so the EITC may not be around forever…although under the current law, it’s here until at least the end of 2017.
And that’s it for right now. Filing taxes can be stressful if you’ve never done it before so if your grief is fresh and you’re overwhelmed, I recommend using the link at the top of this article to find free help or pay a preparer to help you. But going forward, I promise you online tax preparation services make it super simple to file taxes. You only pay when you file so you can always try one out for free (TurboTax is my personal favorite), and then be out nothing if you decide it’s not for you.
For more on taxes, check out 5 Things Widows Need to Know About Income Taxes.