How can I legally handle some tax issues for my Mom? Especially as she gets to the point where she can no longer understand or sign?

This where you should call the local IRS office and ask for help. They will want the original POA and proof that mom is unable to act on her own behalf. Letters from her MD's will help establish her limitations. Or you could invite them over to see for themselves.

Perhaps the most thorough method of signing on her behalf is to have her execute a Durable POA. You say you have a financial POA; have you read it thoroughly to see if it does give you authorization to execute financial documents on her behalf? If so, that could authorize you to handle the tax aspect about which you inquire.

Just checked the 2848 and instructions. This might help. Download the instructions for completion of the form. (Sometimes you have to read the instructions very carefully to figure out how to use the form - it isn't always clear.

"Specific Instructions

Part I. Power of Attorney"

Line 1. Taxpayer Information" - Read the instructions for an individual.

in Part III, check F, which is for a "family member".

From looking at the instructions, it does specify how an individual family member can complete the form 2848 and use it for the purposes you state.

As to a POA, this is directly from the 2848 Instructions:

"The IRS will accept a power of attorney other than Form 2848 provided the document satisfies the requirements for a power of attorney. See Pub. 216, Conference and Practice Requirements, section 601.503(a). These alternative powers of attorney cannot, however, be recorded on the CAF unless you attach a completed Form 2848. See Line 4. Specific Use Not Recorded on CAF, later, for more information. You are not required to sign Form 2848 when you attach it to an alternative power of attorney that you have signed, but your representative must sign the form in Part II, Declaration of Representative. See Pub. 216, Conference and Practice Requirements, section 601.503(b)(2).
For more information, see Non-IRS powers of attorney under When Is a Power of Attorney Required? in Pub. 947."

Makes sense, right? You have to read it a few times to get the jist of it and work through the requirements. It's like completing a puzzle, or following one of those maze type puzzles where you wander through various paths until you find the correct on.

Here's the link to the Instructions in case you don't have them:

https://www.irs.gov/pub/irs-pdf/i2848.pdf

The sight of an IRS form often sends me into despair and anxiety. GardenArtist, since you see a path and solution through this document I feel confident to tackle it again and - if I get stumped, I will follow your advice, pamstega, and call the IRS to ask for assistance. Grateful to you both!

After working in a tax office for many years i can tell you that calling the IRS is not a scary thing, they are there to help. A simple call to 1-800-829-1040 will give you answers. Many clients filed taxes on behalf of parents, very common. Just ask the rep your questions and you mind will be at ease. If you need help pop into an H&R Block office ask to speak with an enrolled agent. They are very helpful and will even call the IRS with you. Just dont worry you will be fine.

I have a POA for my husband, I thank all that is holy that we executed the documents and wills a year before he was diagnosed with LBD. The POA allowed me to set up a Payee account for his social security so I can direct it to his expenses and separate our financial lives. Separate financial lives gives you opportunity to apply for some needs based support as they only look at his income and not mine.

Yeah I wanted to cover everything. I included the Drs letters that were needed in order for me to become POA? Mom had stipulated that 2 Drs had to say that she was not capable to 1 live alone, nor handle her finances. The pages that said that if I didn't not want to be POA anymore then my sister would take over. I also included the signature page containing the signatures of lawyer, witnesses, mom's signature, and the notary stamp. I did not want to have the IRS balk that something was missing.

was your mom saying that 2 drs. had to say she wasn't capable of living alone in order for her POA to be valid?

After my FIL died, one of the people who came to his funeral was his accountant--a frazzled, depressed guy if ever I saw one. He was not very upset over our loss, but VERY upset b/c my FIL hadn't filed his taxes that year! I calmed HIM down and said I'd have the pertinent forms in his office within a week. (Regretted that comment the moment I actually looked in dad's office...he'd lived 14 years in his condo, there were 14 "towers" of paperwork....I just went through the last two, got the papers the acct needed and all returned checks (dad ran a little side business as a travel guide) and took all this mess to the acct. End result? He owed about $200 in taxes and the case was closed. Dad has been gone 12 years and I have long since destroyed all the "back taxes" files.
It can be scary and frustrating, but be aware that you are not likely to get audited, and often and "audit" is simply the IRS needing a small piece of information. You just fill out your forms and forget about it.

Yes, my mom specifacally had it written in the paperwork that if 2 Drs wrote letters saying that she was incompetent then I would become her POA. This was due to save the family from getting court ordered guardianship established. She had attended an estate planning seminar way back in 2001 and had everything taken care of. My dad had passed away in 1997 and mom was still working until 2001. She had inherited some money from a relative and knew that she had to protect it and make it grow for her use in her old age. Most of monies saved during their marraige went to pay for parkinson medicine that they paid for on their own.

bls, guess my question was really that she stipulated that it had to be 2 drs., rather than just one, before the POA would be invoked, just wondering what her reasoning was for that
but, on the other note, do you mind telling a little about what she did with her money, because I have that situation and wanting to do the same thing