I was POA for my recently passed (Dec 2022) step father. I became his POA in September of 2021, I finally got him to allow me into his financial business in which I have found out he did not file taxes both
Fed and state for prior years. He moved himself into an assisted living facility in 2019 and could no longer afford to keep up his house note and the assisted living expenses so he lost the house in foreclosure, what I want to know is as POA ( I know the POA died when he died) am I responsible for his taxes for 2022or even for 2021 ? I tried calling the IRS and did not get a answer as to either way to pay or not to pay, I did come across a IRS form 56 "Notice concerning fiduciary relationship" and there is a box #5 that says " if your authority as a fiduciary does not cover all years or tax periods, check here .. and list the specific years or periods within your authority"..... First off I don't speak "IRS" so I really don't know the definition of "fiduciary" .... Long story short am I responsible for his taxes since he died before the end of the tax year and the POA died with him, am I responsible for any year that he did not file prior to my POA, am I responsible for 2021 since I was appointed POA the last quarter of 2021 ?? He has no assets, no property, no real money....
Thank you for any help or advice you can give.....
Well, ok, good for you.
HE was panicky b/c FIL hadn't done the last year's taxes and he needed to 'put this to bed'.
Was a weird, disorganized man, and I was nothing more than a DIL, with no knowledge of anything financial for FIL.
Yet I combed through his 'files' and took all the salient info to the acct. (Still don't know why I did that, it was a real pain).
About 2 months later, a small refund check arrived and that was the end of taxes. I refused to do the few months of the year in which he died---and again, of all people, how did I get stuck with this?
If you are responsible, its only for the year 2021. Your POA stopped at death so now the Executor takes over if there is a Will. If no Will then someone needs to become Administrator, if any kind of estate. That does not have to be you. Executor/Administrator will file for 2022.
Now I say 2021 because no tax records for that year are supplied till EOY or January so you could have done them. But, was Dad competent and if so, filing taxes may have been his responsibility. But then as said, he may have been told he no longer needed to pay taxes because his income was only SS. If he had a pension, there is a income cap allowed. My Mom made 18k a yr in Social Security and another 2400 in pension a yr and the IRS told her she no longer needed to pay taxes.
As said, let it go for now. You were really not his POA for that long. My Mom had nothing but a house when she passed. I asked my tax person if I needed to file even though Mom never paid. She said all I would get was the credit which would end up being used to pay her to do the taxes. I sold the house for much less than it was worth. Had a lawyer do the final accounting. From the proceeds Medicaid was paid as were the taxes. We got 10k to split among 3 children. Moms been gone 5 yrs and I have received nothing from the IRS. As said, if you do, send it back, deceased.
Another thought, the Government doesn't recognize POAs so...how can they make you responsible when they don't recognize it.
I would not let myself worry about it.
I just got a letter from the IRS regarding a question I wrote them about in Oct. 2020. So I would say they are a bit behind, anyway!!
For 2022, 2021 and earlier, IRS can sue the estate for the taxes – as you say, the POA has lapsed. If the estate has no assets, they won’t bother to sue because they can’t recover anything. The only possibility of liability for you, is if you were negligent yourself, in your duties as POA. It’s worth re-reading the POA, because they do vary and it is possible (though unlikely) that it put some responsibility on you to sort out past tax affairs, and you were negligent yourself.
My suggestion would be to provide details to IRS about the value of the estate, and wait to see if they try to go after you before you start worrying about what to say if they do.
His only income was SS and a small interest payment monthly. So, depending on your SDs source of income, he probably didn't need to file.
No, you are not responsible for his taxes after death. That would be the executor of his will. However, if he didn't have anything, there probably isn't a will and his legal next of kin can do an affidavit to settle things up. I got the affidavit to settle all my dad's stuff from the DMV.
I am sorry for your loss and pray The Lord will give you comfort during this difficult time.
Edit: you have to specifically assign an IRS fiduciary, so that doesn't apply to you.