How to Manage and File Your Elderly Parent’s Taxes

Guide to Managing Elderly Parent's Taxes %%page%% %%sep%% %%sitename%%

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Managing and filing taxes for elderly parents can be an intimidating task, but at The Ridge, we understand the complexities caregivers face during tax season. Our aim is to support you through this process by providing valuable resources and insights tailored to address common tax-related questions.

Please keep in mind that although we offer assistance, The Ridge does not provide tax advisory services. For personalized advice, we recommend consulting with a certified tax or financial advisor.

Whether you’re exploring deductions and credits or seeking reliable resources for tax preparation, this guide will discuss the following topics to help you navigate these challenges with ease:

  • Can I do my parents’ taxes?
  • How do I get power of attorney for my parent?
  • How do I get guardianship for my parent?
  • Can I claim my elderly parent as a dependent to save on taxes?
  • What are the tax benefits of claiming my parent as a dependent?
  • What resources can help me file my parents’ taxes?

Let’s dive in!

Can you do your parents’ taxes?

Yes! If your parents need to file taxes, then you can file their taxes for them. All you need is their consent, whether it is written or verbal. You should also file Form 2848 to make sure you’re able to speak with the IRS for them, if needed.

If your parents aren’t able to make decisions and can’t consent, you can still take care of their taxes for them. To do this, you’ll need to have the right legal authority, such as power of attorney or guardianship, that allows you to handle their taxes.

How do you become a power of attorney for your parent?

To become a power of attorney for your parent, you need to submit documentation. Every state has its own form, and will usually need to be signed by both you and your parent in front of a notary. It’s important to note that power of attorney can only be granted while your parent is in good health and can consent.  

Tip: If you’re filing your parent’s taxes and they are able-bodied and capable, you may want to set up a durable financial power of attorney. A durable power of attorney (POA) is basically a legal document that lets you pick someone you trust to handle your money and make legal decisions for you if you can’t do it yourself. The “durable” part means it stays valid even if you become unable to make decisions. It covers stuff like paying bills, managing bank accounts, and handling property or investments. It’s a smart move for estate planning, ensuring your loved one’s affairs are in good hands if something were to happen. Similarly, you may want to consider a medical power of attorney just in case. That way, you can make healthcare decisions for them if needed down the line.

How do you get guardianship for your parent?

If your parent is unable to make decisions, and you haven’t been designated as their power of attorney, considering guardianship could be a viable next step. This is a more involved process which typically includes: 

  • Filing a petition in the court of the county your parent lives in.
  • Notifying your parent and other family members about your petition.
  • Having a professional evaluate and send a report to the court confirming your parent is incapacitated.
  • Attending a hearing where a judge will decide whether or not to grant you guardianship.

If, for some reason, you aren’t granted guardianship, that doesn’t mean the court’s decision is final. You may be able to appeal or reapply based on the requirements of your county, especially if your circumstances change.

Can you claim your elderly parent as a dependent to save on taxes?

Yes, if you and your parent meet the following conditions, you can claim your parent as a dependent on your taxes. There are just 2 important conditions to be aware of: 

  1. Their gross income is below the threshold, which is $4,700 for the 2023 tax year.
  2. You’ve contributed to more than half of their cost of living, by supporting them through:
    • Food
    • Housing
    • Medical expenses
    • Any necessary bills like heat, electricity, etc.

Are there tax benefits for claiming your parent as a dependent?

If you want to claim your parent as a dependent, it qualifies as the “Other Dependent Credit”, which is a $500 credit per parent for the 2023 tax year. It’s important to note, though, that you may not get the full credit if your income is over $200,000 (or $400,000 if you’re filing jointly).

You should also know that you could also be eligible for the “Child and Dependent Care Credit”. This is a $3,000 credit, or $6,000 for couples filing jointly, which can help to cover some of the costs associated with caring for your parent.

Are you planning to file your parent’s taxes? 

If so, make sure you have reviewed any deductions and credits that are available before you start. In fact, it’s possible you may not even need to file your parent’s taxes. If you’re ready to file and need some assistance, you can rest assured, because there are many paid and free resources at your disposal to help you make sure they’re filed accurately and efficiently:

Compassionate Care and Support for Caregivers and Seniors at The Ridge

At The Ridge, we recognize the challenges caregivers face while caring for their aging parents. That’s why we’re more than just a senior living community—we’re a compassionate support system dedicated to assisting both seniors and their families. From offering practical advice on navigating the complexities of caregiving to creating a welcoming social environment where residents can thrive, every aspect of The Ridge is designed with your family’s needs in mind.

We understand that the decision to move a parent to a senior living community is significant and can feel overwhelming. That’s why we’re here to support you every step of the way. Whether you’re exploring options for independent living, assisted living, or memory care, The Ridge is committed to making the transition seamless and fulfilling for both you and your loved one.

If you’re a caregiver seeking a supportive community for your parent, look no further than The Ridge. Get in touch with us today to learn more about how we can assist you and your family on this journey