The “Widow’s Penalty Tax” and How to Avoid It

You are receiving this email because you signed up to receive Bob Carlson's free e-letter Retirement Watch Weekly, or you purchased a product or service from its publisher, Eagle Financial Publications. [Carlson's Retirement Watch Weekly] [Retirement Reports](www.retirementwatch.com/retirement-resources/) [Retirement Articles](www.retirementwatch.com/retirement-articles/) Brought to you by Eagle Financial Publications The “Widow’s Penalty Tax” and How to Avoid It by Bob Carlson Editor, [Retirement Watch]( 07/21/2024 SPONSORED [July 29 Deadline: The #1 Monthly Dividend ETF]( [image]( It's paying 161% bigger dividends than aristocrats, and it's up 5.62% since making its newest announcement. If you add it to your portfolio before July 29, you'll secure a payout of $2.05 PER SHARE! [Click here now to learn more before it's too late.]( [CLICK HERE...]( Fellow Investor, [Bob Carlson]The widow’s penalty tax is one of the least known yet most onerous of the retirement Stealth Taxes. Since few people are aware of it, few retirement plans defend against the widow’s penalty. I frequently warn people about the “solo” years. Those are the years after one spouse has passed away. The surviving spouse must maintain the household with one less Social Security benefit and perhaps a decline in other income. In addition, expenses are likely to increase because the surviving spouse needs help the deceased spouse used to provide. Perhaps what’s least known about the solo years is that income taxes are likely to be substantially higher for the surviving spouse. The solo years often are when retirement plans fall apart and the surviving spouse struggles. The widow’s penalty tax is a major reason... Here’s How the Widow’s Penalty Works When both spouses are alive, the couple’s tax return filing status is “married filing jointly.” But after one spouse passes away, the surviving spouse’s filing status changes to single. The married filing jointly status is the most beneficial while the single filing status is unfavorable. Taxpayers who are married filing jointly stayed in the 12% tax bracket until their taxable income exceeded $80,250 in 2020. But a single taxpayer stays in the 12% bracket only until taxable income exceeds $40,125. The 22% tax bracket applies to a married couple filing jointly until taxable income exceeds $171,050... but for a single taxpayer the ceiling is taxable income of $85,525. A surviving spouse is allowed to use the married filing jointly status only for the year in which the other spouse died. The special surviving spouse status can be used for a few years – but only if there is a dependent child in the household. You can see the surviving spouse is hit with a double whammy. First, as I mentioned earlier, income is likely to decline. The household begins receiving only one Social Security check instead of two. Other sources of income also might decline. For example, the deceased spouse might have been receiving a pension or annuity that upon his or her death either ends or pays a reduced amount to the surviving spouse. [What Investors Can Do If They’re NOT Ready for Retirement]( [image]( Thanks to a little-known loophole in the law, investors can collect between $2,500 and $3,900 per month for the rest of their lives, tax free, even if they currently have ZERO saved for retirement. It’s a retirement strategy unknown to most financial planners, yet it’s 100% legal and approved by the IRS. One famous investor used this secret strategy to turn just $2,000 into $5 billion. [Click here to find out more.]( [CLICK HERE...]( Second, the surviving spouse is pushed into a higher tax bracket. The income usually doesn’t decline enough to keep the surviving spouse in the same tax bracket as a single taxpayer. That would require the income to be cut in half. Instead, the surviving spouse loses some income but also pays a higher income tax rate on the remaining income because of the change in filing status. Income declines, but income taxes increase. There can be a third hit to the surviving spouse. Higher-income Medicare beneficiaries are subject to the Medicare premium surtax, also known as income-related monthly adjustment amount (IRMAA). As with income taxes, the Medicare premium surtax changes with marital status. A single taxpayer with the same income as a married couple will pay twice the Medicare surtax as the couple. A newly widowed taxpayer who retained a high percentage of the couple’s previous income could pay as much or more in the Medicare premium surtax as the couple paid jointly. In next week's Retirement Watch Weekly, I'll share a fourth negative effect of the solo years – and how to plan for the Widow's Penalty Tax. To a better retirement, [Bob Carlson] Bob Carlson Editor, Retirement Watch Weekly Editor’s Note: According to the Survey of Consumer Finances (SCF), nearly half of all U.S. households have no money at all saved for retirement. Yet there is simple but little-understood solution to this looming retirement crisis. If investors [act quickly enough](, they can LOCK IN a regular source of extra income with annual returns as high as 11.1%, guaranteed for life. That’s 761% greater than the average S&P 500 dividend. What’s more, these payments are NOT affected by anything going on in the stock market or in other financial markets. There’s only one downside: this rare opportunity to lock in DOUBLE-DIGIT returns for life may not be available much longer. [Click here to find out more!]( SPONSORED [It's hot gains season]( [image]( Exciting trades are exploding. With Nvidia's record-breaking surge making it the world's most valuable public company, the market is heating up with opportunities. The excitement around A.I.'s potential is creating waves that elite Options traders are riding to big wins. Want to know how top Options traders leverage A.I. for these gains? Our complimentary live session will reveal the strategies and tools they use to stay ahead. Join over 100,000 traders who have already attended and benefited from this training and [Discover how top Options traders leverage A.I. in July for big wins.]( [CLICK HERE...]( Want More Retirement Advice? Check out my website, [RetirementWatch.com](, where you’ll find hundreds of free articles covering every aspect of retirement planning. Popular Posts: [Nine Important Things to Know Before Contributing to an IRA]( [How to Help Children or Grandchildren Buy a Home]( [Building the Complete Estate Plan]( [Finding Higher Returns With Low Risk]( New to the Retirement Watch Community: SeniorResource.com Retirement is often viewed as a period of life filled with relaxation, leisure, and the freedom to pursue passions and hobbies. However, transitioning into retirement also brings about a new set of financial challenges. While you may no longer face the daily grind of commuting or work-related expenses, there are several costs that can suddenly appear, potentially disrupting your financial stability. Understanding these costs and planning for them can help ensure a smoother and more enjoyable retirement. [Here are 10 costs that can unexpectedly arise in retirement.]( About Bob Carlson: [Bob Carlson]Robert C. Carlson is the author of the books The New Rules of Retirement and Retirement Tax Guide, editor and investment director of the popular retirement newsletter, Retirement Watch, and editor of the free weekly e-letter, Retirement Watch Weekly. Bob is a frequent speaker at investment conferences around the country, and you can also hear Bob as a featured guest on nationally-syndicated radio shows, such as The Retirement Hour, Dateline Washington, Family News in Focus, The Michael Reagan Show, Money Matters and The Stock Doctor. About Us: Eagle Financial Publications is located in Washington, D.C. – only a few blocks from the Capitol. Our products have been helping investors build their wealth for several decades. Whether you’re a long-term investor or short-term trader, you’ll find the right strategy for you, including how to earn more steady income to spend now, preserve and grow your capital to enjoy later, and whatever other investment goals you have. Visit Our Websites: - [StockInvestor.com]( - [DividendInvestor.com]( - [DayTradeSPY.com]( - [CoveredCall](.com - [MarkSkousen.com]( - [GilderReport.com]( - [BryanPerryInvesting.com]( - [JimWoodsInvesting.com]( - [InvestmentHouse.com]( - [RetirementWatch.com]( - [SeniorResource.com]( - [GenerationalWealthStrategies.com]( - [InvestInFiveStarGems.com]( - [[YouTube] Visit our YouTube Channel - Eagle Investing Network]( To ensure future delivery of Eagle Financial Publications emails please add financial@info2.eaglefinancialpublications.com to your address book or contact list. This email was sent to {EMAIL} because you are subscribed to Dividend Investor Daily. To unsubscribe from this list please click [here](. To stop receiving emails simply click [here](. If you have questions, please send them to [Customer Service](mailto:customerservice@eaglefinancialpublications.com). View this email in your [web browser](. Legal Disclaimer: Any and all communications from Eagle Products, LLC. employees should not be considered advice on finances. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized advice on finances. Eagle Financial Publications - Eagle Products, LLC. - a Salem Communications Holding Company 122 C Street NW, Suite 515 | Washington, D.C. 20001 [Link](