Important Information!

I am not a tax professional. I am not offering any advice of any kind about the preparation or filing of taxes for you or your loved one. This blog is strictly opinion-based, and should not be interpreted by anyone as legal or professional assistance of any kind.

Welcome To Part 2!

In preparation for this week, and with tax season upon us, I hope you spent a little time finding and organizing as much of your loved one’s paperwork as you can. 

Here is a short list of what I did this week:

• I made sure I had all of the online login credentials for all of their investments and particularly their banking information. 
• I went through the mail with a fine-tooth comb to find all of the documents you need to complete the process
• I created digital files to keep their information apart from yours.
• I scanned all of the documents that came in paper form so I can maintain all records digitally

Getting Additional Information From Companies They Work With

If you recall from Part 1, I have been doing their taxes for decades, so I have had a front row seat to everything that happened that the beloved IRS might need to know about. 

Also fortunate for me is the fact that my parents are stable, calm investors. They didn’t trade stocks—they bought them to hold for a lifetime. They didn’t job-hop—they worked for the same companies for decades. 

Particularly in their retirement years, their lives were on auto-pilot. I’m guessing you will find the same holds true for your loved one.

If this is the first year you are compiling data, take your time and make sure you are getting everything. Pop had a part-time night job, for example, that pays him a small retirement pension. It would have been very easy for me to overlook this asset of his. 

Look at everything twice.

What If Something Seems To Be Missing?

This has absolutely happened to me, and it was nerve-wracking. What if, as you go through their paperwork, you just can’t find something. You know they receive dividends from a particular stock, but you can’t find the 1099-Div? You know they have a savings account with Bank of America, but you just can’t find the tax document?

Take a deep breath. You can recover anything you know is missing.

Hopefully, you have done your homework, and everything related to their finances is already online. If that is the case, you don’t really need to worry about one missing form—all you need to do is log on to the account, and find the tab for “tax documents”. Every financial institution I have ever worked with has this option online, so I can see, download and even print anything that I can’t get my hands on physically. 

The real fear is that there is something you don’t even realize exists. All you can do is your best, and if the Internal Revenue Service does contact you because you missed a form, they will help you correct your income tax return. 

What If You Find Something Troubling?

It will be on auto-pilot, probably. What if it isn’t? What if they have received some shady or downright negligent advice over the years that has messed up their holdings?

Unfortunately, the elderly are extremely susceptible to scams, and before they realized they needed a Mayor for Crazytown, they may have been sucked into bad investments or high-load investments with tremendous fees being paid to their “advisors”. 

If you find things that look, well, a little hinky, investigate immediately. 

Consider A Professional

At this point, I’d be surprised if you weren’t feeling more than a little overwhelmed, and looking for an escape hatch. Don’t panic or overreact! If you find at any point in the income tax return journey that you are just over your head, there is help around.

This is probably the top reason we are tackling this chore in early February, so you have time to step back and bring in the big guns to give you a hand. Trying to get a professional to help you in April is virtually impossible. 

• Tax accountant – A quick Google search will find a ton of resources for you to find a certified tax preparer. Might I suggest, however, that you start that research with AARP or the local Senior Citizens Center, instead. Those resources will have a “preferred” list of providers who might do elderly tax returns at a discount, or at least have been vetted by the organization.
• Big box store company – Quite a bit cheaper than a sole practitioner tax preparer, you can take the entire pile of paperwork to your local big box store—think Walmart or the local grocery store—and they might have a pop-up income tax preparation site at the front of the store. While not my first choice, anyone working there had to at the very least pass the test to be a certified tax preparer for the IRS.
• Another alternative – I’m about to blow your mind, Boo Boo. VITA/TCE—write those initials down. Volunteer Income Tax Assistance/Tax Care for the Elderly. This is a governmental agency available to the elderly and low income taxpayers in every state in our country. This should be your first phone call—even before you start doing their tax return yourself. VITA/TCE has very specific laws about what types of returns they can do, so it is entirely possible your loved one will not qualify. My mom doesn’t qualify. But, if your loved one does qualify, you can have IRS trained volunteers prepare and file the return for you, taking it entirely out of your hands for no money. Send me a message if you need further information about this fantastic program.  

Doing It Yourself

When you became The Mayor, I strongly suggested that you become intimately involved in your loved one’s finances, and I hope you have done that. Knowing what to exactly in terms of bills and monthly income for Mom made it much easier for me to relax and enjoy her company for years. It also made it substantially easier for me to make sure her tax burden with the government was taken care of in a timely manner. 

Once you have gotten all of the necessary paperwork together, I strongly suggest one thing moving forward: Consolidate.

Close smaller, low interest bank accounts in favor of using one preferred bank. Make sure all of their investment accounts are accounted for, and try to use a clearinghouse to maintain records of all investments in one place. For example, all of Mom’s stocks are housed in computershare.com, so I can easily find any missing documents immediately. 

If you can take the time this year to fully and completely master their finances as they relate to the Internal Revenue Service, all future years will be easier, whether you actually prepare the return yourself or hire someone. 

Why Aren’t They Exempt?

Mom started working full-time when she was 15 years old. After the death of her father, she had to drop out of school to help support her sisters and brother. She retired at 60 years old, and will be 95 this year. 

For heaven’s sake, Uncle Sam, leave these people alone!

Short answer: They just have to pay until they die. Then, as my cousin just reminded me, they still have to file post-death tax returns.  

Sigh…

No Matter What…

My first tax return was at age 15, too, when I first started working as a legal secretary. Since then, I have done my taxes every year, as they have become more and more complicated, then more and more automated, to the point that now I barely type anything into the online program.

Sure, it seems easier…but I’m still paying and paying and paying. Just like you.

Here is the one, single thing I’ve learned in the decades I’ve done taxes:

Be as honest as you can. It is the IRS, Boo Boo.

THANK YOU SO MUCH FOR READING THIS FAR!!!

Wow! You made it! Thank you for reading about tax time for the elderly!

Hey, since you’re here! You may as well check out part 1, here, or if you’ve read that, check out part 2 of death vigils, here! Or maybe you want to hear more about Pop, here. Or, check out our other topics here! Either way, I appreciate you!

Please leave a COMMENT about any tips you may have!! Or comment with YOUR story! Any dementia stories? Let me know!

Please, feel free to contact me or leave a COMMENT with anything you would like to hear more about! Or reach out with any unrelated questions, comments, concerns, or random outbursts of excitement by clicking here.

Oh! And don’t forget to check out my video series by CLICKING HERE!!!

Resources

https://www.thebalancemoney.com/how-to-file-tax-returns-for-an-incapacitated-parent-6281213
https://www.irs.gov/individuals/seniors-retirees
https://getcarefull.com/articles/how-to-file-a-tax-return-for-a-parent