How Losing a Spouse Can Double Your Tax Rate Overnight

"Losing a spouse can affect every aspect of your life - especially if you are a senior and you have been married for a long time. While the emotional effects of the loss are (rightly) your primary focus in most situations, you also need to be aware that there are profound financial complications that can arise when your spouse has passed on. In fact, the death of your husband or your wife could potentially send your tax rate soaring overnight."

"When your spouse dies, and you are younger and working, there's a very good chance that your income will decline when your husband or wife's paychecks stop coming. If you are retired, though, then your income may not go down by much even after your partner has passed on, since you may be collecting pension income or income from retirement accounts that will stay steady. But, while your income may not change a whole lot, your tax filing status will change."

Death of a spouse can create significant financial and tax consequences for the surviving partner. Retired survivors may continue receiving pension or retirement-account income, so total income may remain steady even after the spouse's death. A change in tax filing status from married filing jointly to single, head of household, or qualifying widow(er) can trigger a "survivor's penalty." Narrower tax brackets for single filers and loss of deductions, including roughly half of the standard deduction, can push a surviving spouse into a higher tax bracket. Awareness and proactive tax and financial planning can help mitigate these effects.

Read at 24/7 Wall St.