If you want to know how to file taxes when widowed, keep in mind that your tax situation can change considerably in the event that your spouse dies. However, the IRS has provided a certain amount of tax relief that a widow or widower may be able to qualify for if they meet all of the criteria. Regardless of your tax situation, you will likely need to make changes to your W-4 to make sure that the right amount of taxes are withheld each year.
Step 1: File Joint Return
One option available to you is to avoid changing anything on your W-4 for at least a short period of time. In the tax year that follows your spouse's death, you can claim that you are still married, which allows you to file a joint tax return. When filling out a joint return, you will continue to input your spouse's tax information.
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Step 2: Consider Qualifying Widow or Widower Status
If you have one or more dependents, it's possible to leave the W-4 as it is for a period of two years after your spouse dies. This filing status is referred to as qualifying widower tax status, which allows the surviving spouse to file jointly as a married individual for two years. You will need to denote that you are using this status on your tax return by checking the fifth box beside "Filing Status" on your Form 1040.
This type of relief is available to effectively reduce the amount of taxes you need to pay for a set period of time after your spouse dies. In many cases, someone who files an individual return won't have access to as many deductions or receive as large of a refund as someone who files a joint return.
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Step 3: Make Necessary Changes Depending on Widowed Status
If you don't currently have a dependent, you will need to change your W-4 following the first tax year in which your spouse died. First, your filing status should be changed to single from married.
In the event that your total income is less than $200,000, you can claim dependents with the Child Tax Credit, which gives you a credit of $2,000 for children under the age of 17 or $500 for any other dependent who lives in your home for 2022.
These credits are able to reduce the amount of taxes that should be withheld by your employer. When you were filing a joint return, you could obtain these credits if your total income was less than $400,000. By filing an individual return, you only qualify if your income is less than half of the previous amount.
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Step 4: Eventually Change W-4 Once the Qualifying Widow Status Elapses
The qualifying widow tax status only applies for two years after your spouse dies, which means that you will eventually need to make the same changes as mentioned in step three. If you have any dependents, you can check the box for "head of household." If you don't have dependents, your status should be changed to single.
As mentioned previously, you will need to calculate and add up all of the credits you expect to receive because of the dependents who live in your household. If you have two children who are under the age of 17, your credit would amount to $4,000, which you would place in the blank area beside line three in step three on your W-4.
While changes to your W-4 aren't always immediate following the loss of a spouse, they will eventually need to be made. By knowing how to change your W-4 now, you can avoid hours of research when it comes time to make the necessary changes.