Dead husband leaves heartfelt anniversary message for wife
Karen Koutsogiannis of Swansea, Massachusetts, opens a wedding anniversary card from her late husband, Anthony, who recently died of pancreatic cancer.
It’s hard enough to grieve the loss of a spouse, but when tax time comes around, you may be in for another shock.
Without planning, the surviving spouse may be surprised to find that their taxes have significantly increased despite their reduced income due to the “widow penalty” inherent in the tax code. This penalty occurs if the surviving spouse’s tax status changes from filing jointly to single. The standard deduction will shrink and the tax bill will be compressed, creating a double whammy for widows.
Not only do surviving spouses face higher taxes, but Medicare premiums and Social Security taxes can also be higher due to income thresholds. Katie Carlson, head of wealth strategy at Bank of America Private Bank, said women often suffer the penalty because they tend to live, on average, five years longer than men.
“It’s a tough situation,” said Katie Carlson, head of wealth strategy at Bank of America Private Bank. “There’s no way to completely avoid it,” she said, but there are ways to reduce it.
How are widows punished?
Here’s how widows are punished:
- The standard deduction for 2026 is $35,500 for joint couples age 65 and older, but drops to $18,150 for single filers. Even if losing one Social Security check reduces your overall income, a lower standard deduction can result in a widow’s higher taxable income.
- A married couple with taxable income of $100,001 would qualify for the 12% tax rate, which applies to taxable income between $24,801 and $100,800. Income between $50,401 and $105,700 is taxed at the same or lower rate of 22%.
- The increase in taxable income could also trigger Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) in two years, which will be phased in at $109,000 for single filers and $218,000 for married couples filing jointly in 2026. Above $109,000, a Medicare beneficiary will pay $95.70 more per month, or nearly $1,150 per year, than a beneficiary who does not pay IRMAA.
- The surviving spouse may also end up paying more taxes on Social Security. A filer must pay taxes on 85% of their monthly Social Security check on income that totals just over $34,000 of adjusted gross income, tax-free interest, and half of Social Security. That compares to more than $44,000 for joint filers.
How can we reduce the punishment for widows?
Advisers say it’s always better to plan early, before someone dies and before required minimum distributions or Social Security. But even if that’s not the case, there may still be a small window in which to take action.
“The first year is critical,” says Patrick Simasko, an elder law attorney and financial advisor with the Simasko Law Firm. “If I died today, I would only have 5 months worth of income, but I have a couple tax deduction this year. We should extract as much tax as possible while we are still in a more favorable tax system. ”
Generally, joint status only lasts for the year the spouse dies, but it may last longer for widows in certain circumstances. Qualified surviving spouses (QSS) who have not remarried and have dependent children or stepchildren can file jointly and claim a larger standard deduction for two years after death, says Richard Pong, a San Francisco-based certified public accountant. Once the QSS period ends, you may be able to apply as head of household. This provides a higher standard deduction than a single claim, but typically lower than the QSS.
Take advantage of lower tax rates with some Roth conversions, says Shannon Stevens, managing director and principal of Hightower Signature Wealth.
You should also review your IRA or taxable account and consider moving to more tax-efficient investments such as index funds or exchange-traded funds (ETFs) to minimize capital gain distributions and lower your taxable income, Stevens said.
Charitable donations also reduce income. If you are age 70 1/2 or older, you can make qualified charitable contributions from your retirement account. If you make it after age 73, it will count toward your required minimum distributions.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
