What tax breaks are afforded to a qualifying widow?

The tax breaks accorded to qualifying widows or widowers include being able to use a tax filing status that allows for a higher standard deduction and also receiving beneficial tax treatment in regard to some investments. Qualifying widow status is a special filing status available to surviving spouses for the two years following the year in which their spouse died. The purpose of this special status is to ease any financial burdens incurred resulting from the death of a spouse.

The requirements for qualifying widow or widower status include all of the following:

• Having a spouse who died during a year in which the surviving widow or widower filed, or was eligible to file, a joint tax return.
• Having a child who is claimed as a dependent, and who lives in the same home as the widow or widower all year long, in a home for which the widow or widower pays more than half the cost of upkeep.

The tax benefits for a qualifying widow or widower are significant. During the year a spouse dies, the widow or widower is still eligible to file a tax return using the married filing jointly tax status. For the two years that follow the death of a spouse, the widow or widower is allowed to file using the special filing status of qualifying widow/widower. This filing status allows him or her to take the higher standard deduction available by using the married filing jointly tax rates.

Qualifying widows or widowers can also gain special tax breaks on investments they owned jointly with their spouse. If the widow/widower and spouse owned rental property, it qualifies for a step-up in basis for tax purposes. This can translate into additional depreciation allowances and a lower amount of taxable gains when the property is sold. The step-up in basis also usually applies to other assets, such as stock shares, the widow inherits as the beneficiary of a deceased spouse's estate.