What is a Qualified Widow?
Qualified widow (or widower) is a tax-filing status similar to filing single, married filing jointly, married filing separately, or head of household.
How Does a Qualified Widow Work?
For example, let's assume the John and Jane Doe have been married for 15 years and they have 2 minor children. If John dies, Jane may file as a qualifying widow for two years following John's death, allowing her to keep using the married filing jointly status she had when John was alive.
According to the IRS, in order to file as a qualifying widow or widower with at least one dependent child, the survivor must have been entitled to file a joint return with the spouse for the year the spouse died, the survivor did not remarry in the two-year period, the survivor has a child or stepchild for whom he or she can claim an exemption, the child lived in the home all year, and the survivor paid more than half the cost of keeping up a home for the year.
Why Does a Qualified Widow Matter?
Filing as a qualified widow or widower often lowers a person's federal income tax bill, which is often a relief considering that the person is likely dealing with high medical bills and funeral costs. However, the IRS only allows a person to claim the status for two years. Also, qualified widow's or widower's contribution limit on a Roth IRA begins to phase out as his or her adjusted gross income (AGI) reaches certain thresholds.