Follow
Share

My father is 92 and lives in a nursing home. He has not paid taxes in several years, stating someone told him he does not have to file taxes. He still has a home in the community and some assets he wants leave to a disabled son, but I am worried that it will not possible in the future. Is there anything I can do for him?

This question has been closed for answers. Ask a New Question.
Yes. Pay for an accountant
Helpful Answer (0)
Report

There’s always something that can be done, in regards to handling unpaid taxes.
A tax attorney helped a family member of mine, who had gone 10+ years of not filling. They will work with people, and as far as I know, my relative paid a very small percentage of what he owed; consult a tax attorney.
If there are no liens on the assets that he wishes to leave, he could possibly gift part or all to his son; depending upon the assets value.
Best of luck, and you all stay safe.
Helpful Answer (0)
Report

Not really enough info to give arcuate info.
Helpful Answer (0)
Report

My FIL was 91 when he lost his wife and my husband and his oldest sister took over the money management of his household before he eventually moved to a LTC facility. He and his wife both had not filed taxes for years, either. It seems that they may have not earned enough off the small pensions they each got, but we asked our accountant about it and his answer was that he could review everything BUT said that if he found that he should, indeed, have been filing but hadn't, any new filed income tax would almost definitely trigger an IRS audit. At 92, with no assets or savings and just enough to pay for his independent living arrangement each month, we decided not to pursue it because upon reviewing his small pension it was less than the standard deduction allowed by the IRS.

From the TurboTax website regarding Seniors filing a tax return:

"For tax year 2020, you will need to file a return if:

-you are unmarried,
-at least 65 years of age, and
-your gross income is $14,050 or more

However, if you live on Social Security benefits alone, you don't include this in gross income. If this is the only income you receive, then your gross income equals zero, and you don't have to file a federal income tax return."
Helpful Answer (4)
Report

In reading the initial post again, question:

"He has not paid taxes in several years, stating someone told him he does not have to file taxes."

Is this just a confused statement from him or just written incorrectly?

It is quite possible that he HASN'T paid taxes in years, my mother did not pay taxes the four years she lived in MC.

So was he only saying he hasn't paid taxes, which could be legit, or does he really mean he doesn't file? No mention of dementia, but if he's early stage, it can result in confused statements like this.

As noted in my other comment, if he has someone managing his finances (hopefully they have POA), run it by them. If tax forms have been filed, but he had paid no taxes, it could be just fine!

Also, if he has sufficient assets to pay for his NH for many years to come, it might be wise to transfer ownership of the home now. It can be done via a will, but that can take time to work through probate. Transfer now might be better, esp if he has at least enough to cover the 5 years of lookback by Medicaid. He should hang on to the other assets, just in case he needs it. Let those go via the will (he has one, right? If not, the money may not go where he prefers it to go!)
Helpful Answer (1)
Report
notgoodenough Feb 2021
That's an excellent point, "filing" vs. "paying" taxes; we tend to use the terms interchangeably, and they're not necessarily the same.
(0)
Report
Having done my mother's for a few years (before MC) and my own (on SS also), there's a worksheet to determine whether or not SS is taxable and if so, what percentage. That's for the IRS, the state may have other rules. The standard deduction has been raised and there are additional deductions available for age, blindness, etc. Other income and deductions would impact the tax status.

Does someone have POA for him? Who manages his income and assets? Is the NH private pay? Who pays the utils, taxes, maintenance, ins, etc for the home he owns?

IF he's private pay in the NH, most likely he won't owe any taxes, but I believe he'd STILL be required to file. He would have quite a sizable income to be able to afford NH costs! Granted, he likely wouldn't owe anything, but they would still require filing. They get reports from the income sources, but they don't see the deductions, so they would expect tax payments. Filing with deductions can reduce or eliminate tax, but it still has to be filed.

Once in MC, I took her and trust taxes to an Enrolled Agent (they have high IRS standards to meet to stay Enrolled, but don't charge any more than another tax person.) Because I needed help with the trust taxes, and trust funds went into her account to offset the facility cost and all other expenses, it was best to let him do it all. It was outside my comfort zone.

At the time I took taxes to him, there were still taxes withheld. The first year in MC, which is fully deductible (NH should be as well), she had no tax status. I still have to file her taxes. I used the special W4 to stop the deductions and she pays no tax. AL doesn't qualify for the deduction, only some medical needs, but not room and board. There was a small tax from the state when we sold her condo, but that was it. However, a return still needs to be filed, even if she doesn't pay.

Whoever is managing his finances should be taking care of this. It isn't likely all the paperwork for income, taxes and banking is going to/being stored in a NH. If the house isn't properly cared for, it could deteriorate, OR if the property taxes are not kept up to date, the town could take it.

If he has no POA, who is paying the facility? Who is managing his income? IF he's doing it himself, and is still considered competent, try to get him to assign a POA ASAP! Then someone will have to dig up the paperwork for all sources of income, bank statements, medical costs, RE tax bills and current tax status for the home.

Is someone living in the home and taking care of it? Is the insurance up to date? Are the utilities being paid? Is someone doing maintenance and yard care?

If no one is living there, first concern is insurance. Most regular ins policies DO NOT cover unoccupied homes. You have to get special coverage. It'd be better to ensure the regular ins is paid up AND have someone live there, such as the person he wishes to leave it to.

If the utils aren't being paid, they will get shut off. IF it gets cold, the pipes could burst. IF it gets hot, mold could destroy it if there's no A/C.

Need more input - while you search for all the paperwork you need and get that going, do let us know if the place is "paid up" and someone resides in it/takes care of it. If so, disregard all the above warnings, just work on the tax questions.

A decent preparer could review what you have. An Enrolled Agent could probably smooth the way if he does end up having to file late. I'd avoid places like H&R - my mother forgot I was doing hers, and took it there. Boy, did THEY mess it up! Left off the pension, which was the largest part of her income, and put in for almost 6k refund! I was working on it over the year to get it set (she didn't update the W4 when dad passed, so she owed AND had to pay a penalty.) I made them refile, mom had to send the money back and got another penalty.
Helpful Answer (2)
Report

RickyP123: You should contact a qualified certified public accountant for your father.
Helpful Answer (1)
Report

Start with taxable year 2020 since he should have received year-end income statements by now. See if the assets earn income for him & how much. Combine that with the SS income and minus the exemption and the cost of his nursing home care if medically necessary. Look at the tax table for his filing status. That should give you a rough idea if he owes or if he doesn’t. If the assets are earning income, it should be about the same for the last few years. Seniors usually don’t take wild risks with income-earning assets.

If it looks like he owes for last year, call the IRS for help. They can tell you based on his income, type of asset income(s), if this will be complex. That’s when I’d call a CPA.

If not complex, but he owes, go to a free senior tax center for help to complete 2020. Use that as a model for the previous years.

The IRS is quite fair if he owes for a few years. There’s not much to worry about. Good luck!
Helpful Answer (0)
Report

Go ahead and File them now
Helpful Answer (0)
Report

For the first three years he didn't file, he can still get a refund. After that, he might have been eligible for one, but he won't get it. And if he was eligible for a refund, it might cover his penalty.

More than likely, if he hasn't received a letter yet, he probably owes nothing or very little.

Found this info: Penalty Truth: After three years, you can no longer claim a tax refund for that year (but you may still file a tax return). However, if you owe taxes, you'll need to file your return as soon as possible as well as owe back taxes and penalties.> late filing penalties for each month your return is not filed.

Just take care of it. Go to a tax preparer and they can help you get it all caught up. You might call a few first to see how much they charge per past year. That's what I did for someone and happened upon a tax preparer who did it for $50 per year. Actually, the guy I helped ended up owing very little money because the refunds he had coming helped to offset the amount owed. He was worried he'd owe more than he could pay off quickly. I kept telling him, if he owed a lot, they would have already been looking for him.
Helpful Answer (1)
Report

I was surprised to, to hear my Uncle, who I'm POA for did not have to pay taxes. It is based upon income. When I have my taxes done each year I do bring my Uncle's paperwork with me each year to confirm no tax law change and still good not to file taxes. It taxes my tax guy minimum 5 minutes to review so he doesn't charge me for it. I document the confirmation.

On a side note, if your Dad is leaving something to someone make sure the beneficiaries are clear and anything that has a second living person on it, for example if you are on his bank account make sure the beneficiary states sole rights of survivorship.

Hope that helps.

Definitely contact a professional for peace of mind for yourself.
Helpful Answer (1)
Report

Once upon a time many years ago, I took a job delivering the NY Times in the wee hours....actually NOT the worst job I ever had, and it may have been one of the better, but the wages were nominal and used your own car and wore it out with all the stop and go deliveries. ANyhow, I was considered an independent contractor and didn't grasp the meaning of that until at some point like tax time I discovered it meant you were basically SELF employed, and had to pay income taxes on what you earned. So I wound up owing the IRS a big chunk of $$$. They were NOT horrible to deal with in the least. They were actually understanding and helped to set up a payment plan. It's my understanding that in many cases older adults really do NOT have to pay, though they may have to file taxes. You would be best touching base with a certified elder law attorney and/or a CPA to find out where he stands after plugging the right numbers in. You may be pleasantly surprised and it's still not too late to set things up as he wishes to leave things.
Helpful Answer (1)
Report

Figure out if he needed to pay them, if so, file them and do an Offer in Compromise.
Helpful Answer (4)
Report

Ricky, you might want to research and then consider consulting an IRS Enrolled Agent in lieu of a CPA.   The Enrolled Agents are specifically qualified to represent people before the IRS, so their knowledge of IRS criteria, etc. is more specific.
Helpful Answer (3)
Report

If your income is below $25,000 you MIGHT not be obligated to file income taxes. I was POA for my mother and did not have to file her returns for that reason. When we sold her house she did not have to pay capital gains tax because they had owned the house for 50 years.

I suggest you speak to an attorney about your father's exact circumstances, as well as for state and local rules.
Helpful Answer (4)
Report

I do not know the answer about the taxes - you need to speak to someone who is well versed in the knowledge of that field. I do know for a fact that people can have something and still do NOT pay taxes because their medical expenses totally offset any income they may have. Please consult an expert so you know where you stand and what to do.
Helpful Answer (2)
Report

My Mother is 88 and resides in NC. Her income is under $20,000 which means that she is exempt from filing federal or state income taxes. She owns her home and also receives a reduction in property taxes due to age and income.
Helpful Answer (3)
Report

Oh how well I remember the day, after Mom had moved to our state, I told Mom I would take her to the tax preparer. She quickly told me she had not filed in years. Oh my gosh, I pictured my 90 year old Mother being hauled away in hand cuffs. She informed me she didn’t make enough to file. I had never heard of that. However I still verified everything with a professional tax person, as far as her income, assets, etc. Thankfully she was correct, but I am still thankful I verified it with a person in the know so I could breathe easier.
Helpful Answer (3)
Report
gdaughter Feb 2021
My folks used to regularly go out to lunch on Saturdays which I referred to as my golden hour to get anything done without interference. As mom's dementia rose to the surface and I realized her incompetence I began to go through drawers and everything I could for paperwork, bills, etc. I was terrified to find a drop in no income tax papers after a certain year and learned the same thing...it was a terrifying moment to thing they had not filed in years...
(0)
Report
If your father lives in a nursing home the answer is probably not. But before contacting a CPA or tax preparer first consider:

The question is what is his income - if it is less than the standard deduction (including the age deduction), then no he doesn't have to file. Listed in Instruction for Form 1040 and in Publication 17.

The other question: Has your father been contacted by the IRS. If you father has significant income and hasn't filed, the IRS will contact saying they haven't received his tax returns and to please file. If he doesn't file the IRS will file for him and send him a tax bill. If he doesn't respond to that, then the IRS will start collection procedures and even file a lien.

If his income is more than the age related standard deduction he may still not owe taxes but should probably have filed - (he can deduct his nursing home payments as medical deduction plus any other medical deductions including any health insurance premiums and medications less what may have been paid by his insurance). May want to consult a tax preparer or CPA depending on the complexity of his situation.
Helpful Answer (2)
Report

uh oh! Why doesn't he give the things to the son now?
Helpful Answer (1)
Report
JoAnn29 Feb 2021
If he needs Medicaid within next 5 years, giving money away will cause a penalty.
(3)
Report
I am making the assumption you are talking about filing income taxes. I have volunteered for 11 years for TCE. We do seniors taxes for free. Many seniors have no need to file and your Dad may have been in that situation. As previously stated SS isn’t taxable if other income is low enough. The person doing his taxes would have looked at any additional income he has from pension, IRAs, interest and Dividends. Usually if no tax has been withheld from any of those items and his income from them is low enough he indeed wouldn’t have a need to file. In NY home owners have a discount program for school tax on property called senior star. I often have people file their taxes as a proof of income for their star eligibility. These taxes aren’t actually filed, just the paperwork is filled out for any senior that wants or needs it.
Helpful Answer (4)
Report

Don't pay them off. He can go on a payment plan & I'm pretty sure that when he passes the debt is gone.
Helpful Answer (1)
Report

Get a recommendation for a good CPA, and if s/he can't help you, he can refer you to a tax attorney. My husband is a retired CPA, and you would be surprised how much the IRS will negotiate with people if their CPA or other representative will write a letter explaining the issues. As bad as the IRS is, they are not going to put a 92-year-old in jail for taxes.
Helpful Answer (2)
Report

Check with the county about back taxes. You can set up a payment plan if there is a lien on the property. Medicare and Social Security are not taxed.
Helpful Answer (1)
Report

In addition to what has been said, large medical bills, such as a medically-necessary stay in a nursing home, can offset the tax liability as an itemized deduction.
Helpful Answer (2)
Report
akdaughter Feb 2021
Yes, that is true, but her father would still need to file if his income was above the filing threshhold.
(0)
Report
My FIL died and his accountant showed up at the funeral and somehow found ME and asked ME to help him out with filing dad's taxes of the previous 2 years.

Lucky, lucky me. I got to go through 14 enromous piles of papers to find the stuff the acct needed. I literally drowned him in paperwork.

I do our taxes, but I have for 40+ years and we don't own a business. It did take this poor guy a few months and in the end dad actually got a very small refund.

Since he left a moderately large estate, we expected to have to pay, but didn't. It was a pain to deal with, but it did force me to deal with shutting down all the accts dad had.
Helpful Answer (2)
Report

I would go to the IRS website and see what the requirements are for seniors filing tax returns.

My dad did not have to file returns based on his SS and some interest earned on a property that he sold on terms. He didn't earn enough to make his SS taxable. This was determined through a CPA. I recommend that you check IRS.gov and then speak with a tax professional to make sure you understand what needs to be done. Especially if you are looking for an inheritance, you want to know what he needs to do but, if he is on Medicaid they should be paid back from his assets before he leaves anything to his children.

Obviously a child born with disabilities is an entirely different issue and I would assume that provisions were made many years ago.
Helpful Answer (4)
Report

You can get him an accountant to go through his back taxes, and a trust and estates attorney who can get his affairs in order for the future. He should pay for both but you can gather the paperwork.
Helpful Answer (4)
Report

He is paying privately?

He may have been told by IRS he no longer had to file. Taxes are based on yearly income not what he has stashed away unless he gets a lot of interest on his savings.

My Mom and MIL, both widows, with their SS and small pension didn't bring in much more than 20k a year each. They paid no taxes because most of their income was Social Security and SS is not taxable unless you have other income and that income has to go over a certain threshold before u need to pay taxes.

If your disabled son is on Social Security Disability with Medicare and Medicaid, your Dad giving him any money will effect his benefits. Maybe not SSD and Medicare but could effect his Medicaid. I had to put my nephews money he received from his Moms insurance into a Special Needs Trust before I could get him help. I would check this out before I allowed Dad to give him money.

The next would be if Dad will need Medicaid to pay for his care in the next 5 years. In that time he can not give any of his money away. It needs to be used for his care. The house is an exempt asset but his SS and any pension he receives will be used to offset the cost of his care with Medicaid paying their share. So, might as well sell the house for his care if no one is willing to pay taxes, utilities and upkeep. And it has to sell for Market Value. And if not sold, when Dad passes a Medicaid lean will be placed on the house. Then the house will need to be sold to satisfy the lean. There are rules concerning someone living in the house or renting the house.
Helpful Answer (5)
Report

It well may be that your father did not have to file taxes. My brother didn't have to for many years. But only someone getting all the financial information together at end of year can tell whether income falls below the amount required for filing taxes. You should yes, see a CPA if Dad hasn't filed for years, and discuss this with a CPA, taking whatever information you have, Dad's SS income, Dad's other assets which may be getting earnings each year (which is income).
Without any change in a home it should not impact taxes very much at all other than writeoffs for repairs on any income property, and whatever.
You should also make certain Dad has a will stipulating he is leaving his home to his son, with an executor appointed, and I would see an elder law attorney (Dad's assets pay if you are POA) to see about giving home to disabled child, as this prevents some medicaid clawback often enough.
So basically you are looking at questions that need answers of experts in the field.
Helpful Answer (5)
Report

This question has been closed for answers. Ask a New Question.
Ask a Question
Subscribe to
Our Newsletter