Today I met with my CPA to prepare my income tax and learned the tax penalty of being windowed. .2023 is the first year that my husband was not alive for any part of the year so my tax status changed from being married to being single. Even though my husband’s pension from being a crime lab director ended when he died so I had less income I am now paying more in taxes because I am widowed.
My wife died in 2020. For 2021 and 2022, I got “qualifying widower” status. For 2023, that no longer applied, so I used “head of household.” That wouldn’t apply to you I think; I still have a kid under 18. The change cost me about $5,000.
I would guess it is from the tax tables. The thresholds for each tax amount are essentially doubled for married vs single. The math of this is favorable for married if the incomes are significantly different between the partners. The taxes are about the same if both parties bring in about the same income. My guess would be that you are bringing in more income than he was?
This could be compounded if your in retirement and you are cash in on taxable retirement funds or selling assets that are subject to ordinary income.
You are on the wrong end of changes that have made since the 1980s. At one time, the tax brackets for married people were only marginally larger than those for single people. As more marriages became two worker marriages, the tax impact became substantial. When my wife and I married in 1983, and since we both worked, we would have paid lower federal income tax filing two single returns rather than one as married. In fact, it was reported that a lot of people stayed unmarried while living together, or at least did for income tax purposes.
Beginning about that time, Congress started revising the married tax brackets. Sometime in the late 1990s or early 2000s, we got the structure we now have. I’m don’t know that problem can get remedied at this point, but I suspect there many people in your situation, especially with the increased number of people with IRAs or 401ks that have mandatory withdrawals.
I learned a valuable lesson about divorce. While I was married my withholding was married with 3 dependents. One thing that didnt’ cross my mind was to change my withholding when I got divorce papers. The divorce was final in November and I was taxed at the single rate that year. Ouch.
Yeah, I’ve filed single for 27 years with no dependents, OUCH
My dad passed away last fall, my mom had a fit when she found out last week she was going to have to pay another $500 for last year’s taxes. I have not told her about having to file single next spring, she will get slapped with the taxes next year.
Well, my 32-year late wife croaked in early 2018. I don’t remember but it seems like “qualifying” widower helped some. But then I learned some ways you can screw up.
In 2020 new bride came along. I figured “we will sell her house and the gain will be tax free” that’s what they say, right? Well, oopsie because her bean counter had been depreciating the crap out of it and put her in the 0% tax bracket. Worked because she was running a boarding house. That one bit.
Simultaneously we did some back door Roth for her TIRA, thinking the numbers for jointly are up, which they are. But not enough. That is when a little thing called IRMAA bit. Under that “Count Taxula” scheme, you get hit for increased Medicare premium and I think there might have been less socialist security money.
Moral of this story is: Don’t “have” too much so-called “income” and know how much MAGI you can get to without running into IRMAA. My best strategy so far is to nullify taxation of Required Minimum Distribution money by giving it away to qualified charitable organizations.
This is a good example of why we need to do away with all this garbage.
Taxing life situations and/or lifestyle choices is bullshit.
Low-ish flat tax only, applicable to any form of income whatsoever over the poverty threshold.
No exemptions, no deductions. Otherwise we fall down the same slippery slope we did starting 110 years ago.
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Basically, it’s not being penalized for being widowed. It’s more that you no longer have that extra person to get an exemption for.
No, it’s not an exemption. It’s a whole new calculus of tax rate. That’s crap.
This is what happens when the tax code is used as a behavior tool as opposed to a way to fund the government.
I hate to defend something that just cost me five grand, but do you think a one-person household should pay the same taxes as a two-person household?
The tax rate is determined by total income. If you look at a tax chart for a specific income you will see that if a married couple earned the same amount of income as a single person they will be in a lower tax bracket and pay less taxes for the same income.
So in addition to having a standard deduction that is half of what a married couple can take they will pay significantly more income taxes due to being in a higher income bracket than a married couple with the exact same income.
Having been single for the past 15 years, and not getting any exemptions since 2017, the taxes and income level for single filers is a lot more than for married. I’m thinking of a mail order Russian bride so I can get a tax break.
Something tells me that will cost you a lot more than the tax break.
I think taxes should be based on a dollar amount, not behavior such as being married and having kids.
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I know. But growing up during the cold war the images of Russian women were plump dowdy women. But today - WOW.
I haven’t exactly shopped the market, but I’m not confident that WYSIWYG.
A flat tax with no deductions or credits would solve that.
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