He received money in 2014 from a pension fund. Spent it all. Had two strokes early this year and is under hospice and suffering from dementia. He is 95. We received a letter from IRS stating he needs to file/pay taxes. I am his assigned representative under SOCIAL SECURITY to handle his finances. What should I do?
It was the IRS that decided Dad had died.
Thanks for the concern and the suggestions.
Or something to the effect that their conclusion that he was dead when he was still alive caused us such stress that we had to both seek psychiatric care, for which I intended to send the bill to the IRS (not that it would pay it).
It was news to us that he had somehow died, we both thought he was alive, yet someone at the IRS made such a brilliant determination without any foundation in fact. Even more perplexing is how they expected him as a deceased person to file the form for himself. Unbelievable!
The Michigan Treasury claimed it never received required attachments (the extra postage shown on the certified receipt reflects that their claim of only receiving a 1040 couldn't possibly be accurate). So they cut Dad's refund by about 90%.
Although I hate it, I've gotten used to the fact that one or the other is going to screw up every year and I'll have to put in extra work to get what Dad's due.
"Do You Have To File?
"Use Chart A, B, or C to see if you must file a return. U.S. citizens who lived in or had income from a U.S. possession should see Pub. 570. Residents of Puerto Rico can use TeleTax topic 901 to see if they must file. "
By the time I take the standard elder deduction and the personal exemption, I'm down below the filing limit. And I have no refunds coming, so there's no need to file, unless and/or until I can get a job for an old lady and then will have maybe a few dollars of income to report.
I haven't dealt with pension issues for decades but believe there still are some specific regulations dealing with various types of pensions that are taken in full in one tax year. Google IRS pension regulations if you want to get an idea what the issues are.
I would also send a letter, certified, just to start the document trail, advising of your father's mental and physical condition, and asking if it can provide more detail. You'll need that especially if he has filed in the past and you haven't seen his tax returns, and especially if you don't know where his financial papers are kept.
If you run into problems, call the IRS Ombudsperson; it's that office's mission to cut through the red tape and help taxpayers solve problems. Or you can hire a tax accountant with experience in representing clients with the IRS - there's a specific designation for that but I can't recall it at this moment. This might turn out to be a situation in which you'll need qualified help and negotiation with the IRS, particularly given your father's current condition (i.e., being in hospice.)
If the IRS is owed funds, it does have authority to garnish/attach liens to assets, so I would think very seriously about having someone like an experienced accountant get involved.