Should I file my mothers taxes

BuffaloGal

My mother is roughly in late stage 6. Shes been in Memory Care now for over a year.  Before that she was in Asst Living for 2 yrs. She hasn't lived in her own home now for over 5 yrs. It took awhile to clean out her house because she lived in a different state than my siblings and I. After putting her house up for sale, it took months, but it finally sold (at a loss but at least its gone).

She has some money through investments, not a lot, but it helps and of course her SS every month.  Her taxes haven't been done in years, but I was thinking because we sold her home that we would have file this year. Really I have no idea. My siblings and I all have POA's over her financial stuff as well as her medical but none of us have ever sold a home. Personally I have no idea where to start and its almost too late to get stuff done. I'm not even sure what paper work we would need to have a professional do them.

Do we even bother with filing?  I tried looking stuff up on line but couldn't find any concrete information for our situation. I also tried starting them on H&R Blocks website but hit a roadblock and stopped.

I'm sure somebody here has been in this situation. Any help/info/point in the right direction would be greatly appreciated.

Thanks in Advance

King Boo

You need to hire a tax accountant to help you.  This is likely to get complicated. Not an H&R block sort of tax return.

If there was a filing requirement for your Mom for past tax years, the government can hit you with civil and even criminal penalities for not filing and paying taxes.  Not to even mention, significant financial penalities (which will also acrue with additional interest).

Capital gains from investments most likely means you need to file; social security can be taxed at certain income levels. 

As DPOA, you will most likely be the responsible party they go after. 

Right now, hire the CPA tax accountant who can file an extension for you.

Then, you will be tasked with getting back records for years past where taxes should have been filed. 

If you have your DPOA of the investments you can easily get back records.

I had to do this for my parents.  Having a diagnosis of dementia does not remove the need to file.

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BassetHoundAnn

Technically your mom needs to file if the capital gains on her home sale is over $250K. 

That said...you should still take the advice offered here and have a CPA look over her records for the past few years and see if she should have filed in prior years. You may not need a tax attorney for this but do find a CPA who is an enrolled agent with the IRS because they can look over her records with the IRS and they have experience working directly with the IRS to straighten out problems. 

There are many reasons why you should do this, but here are a few things we ran into with my mom: There is no way to know what exactly the title company reported about the house sale to the IRS. They could have erroneously reported that she made a bundle on the house. Title companies have been known to make errors like that. A CPA can make sure her taxes and what's filed with the IRS accurately reflect the sale and that's especially true if a loss occurred.  

In order for my mom to receive the covid stimulus payments she needed to have filed taxes in prior years and she did not. By getting her taxes updated we were able to get her online to receive thousands in stimulus payments that she missed. 

There is also peace of mind that comes from having a professional go over her records and getting everything in order. As DPOA you can indeed be held liable by the IRS for mistakes and failure to file even after your mother's death. A friend ran into this situation after a relative's death and believe me you don't want to get tangled in a mess like this. You'll be running in circles for years trying to straighten it out and stop the threatening IRS letters.  

And the thing is, it won't cost a lot to have a CPA go over your mom's records and file her return, especially if you are able to get everything well-organized in advance. 

Good luck! The tax situation is one more frustrating thing that overwhelmed DPOAs have to deal with, but it's good to have a CPA on board that one can call on for help. 

Iris L.

I was unable to attend to taxes for about 9 years due to cognitive impairment nos.  After I began medication, I was able to locate a firm that specifically works with troubled taxes.  I had tried H&R Block and a regular cpa in the past but they were not up to the job.  Be sure you work with an enrolled agent.  There were no criminal charges ot threats.  Before, I had tried contacting the IRS.  Everyone was professional and non-threatening.  

Iris L.

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