This past year was the first year that I was fortunate enough to work from my home. Working from my home has been a wonderful change for both personal and professional reasons. The only thing that caused a slight issue was the tax filing changes that I had to endure. The office in my home was now considered a tax deduction. I had to get some help learning how to deduct the things that are allowed on my federal taxes. If you are new to working from home and have a home office, this blog can help you learn what you need to know before tax time rolls around.
There are only a few tax filing statuses, and each is subject to a separate tax rate. A widow or widower with a child may be able to continue receiving some of the tax benefits of marriage by filing as a qualifying widow or widower.
Married individuals filing jointly generally receive the lowest income tax rates. A transitional filing status with the same low tax rate is available to certain widows and widowers. The temporary filing status is only available for the next two tax years following the death of a spouse.
For the actual year of death, your status usually remains married filing jointly. The key requirement for receiving continued preferential tax rates after the death of a spouse is to reside with a dependent child. In addition to the requirements to simply claim the child as a dependent, there are additional requirements that must be met in order for you select the filing status of qualifying widow or widower.
Child residency
To be simply claimed as a dependent, a child only has to reside with a tax filer over half the year. For you to file as a qualifying widow or widower, your dependent child must live with you for the entire tax year. Either way, you receive the benefit of a tax dependent. By using the filing status of qualifying widow or widower, your income tax rate remains low and your standard deduction amount remains equal to that of a married couple.
Child relationship
To file as a qualifying widow or widower, the child must be your immediate descendant. For tax purposes, an adopted child or a stepchild are the same as a natural child. The situation is different for a foster child. A foster child officially placed with you by a court can be claimed as a dependent. However, a foster child cannot make you eligible to file as a qualifying widow or widower.
Filing status advantages
Various tax deductions have thresholds at which the benefit is reduced or eliminated. For example, your deduction for contributions to an IRA may be gradually phased out at higher income levels. For married couples or for individuals filing as a qualifying widow or widower, the IRA income limitations are usually higher than for other filing statuses.
If you remarry during the two tax years following the death of your spouse, you are no longer eligible to file as a qualifying widow or widower. Contact an accountant from a firm like The Callen Accounting Group, PLLC for more information about selecting the filing status most advantageous to you.
Share7 January 2016
