The “widow’s penalty” occurs when a person’s tax filing status goes from married filing jointly to single. This change can cause the surviving spouse to have to pay nearly double the taxes compared to what they were paying.
I am going to share an example of a client of ours (we’ll call her Jill) whose spouse (we’ll change his name to Bill) passed away prematurely before Jill started working with us. Their situation is illustrated in the graphic below. Let me walk you through the impact of the widow’s penalty and how severe it was for Jill.
