Tax Tips for Recently Widowed

1. Claim Your Tax Refund

You may be entitled to your deceased spouse’s tax refund.

2. File as Head of Household

If you were able to file as a qualifying widow(er) for two years you’ll have to change your tax filing status in year three. If you are providing support to a child, grandchild, sibling or other relative, you may qualify for head of household status. This is normally preferable to filing as a single taxpayer.

3. Sell Your Home

If you have a highly appreciated marital home, consider selling it within two years. This preserves a much larger $500,000 capital gains exclusion than the $250,000 exclusion available to single filers.

4. Assess Life Insurance Needs

Your life insurance needs may have changed. Meet with your financial professional to review your new situation.

5. Social Security

If you were both taking a Social Security income benefit at the time of your spouse’s passing, you will now only be receiving one of those benefits. However, the new benefit should be the larger of the two. Many people compensate for the loss of one monthly Social Security check by taking out more from retirement accounts. But this could trigger tax on up to 85% of your Social Security benefits. Non-taxable income from Roth IRAs doesn’t count against you when calculating taxes on Social Security benefits.