It's inevitable that most adult children will face the challenge of managing the financial affairs of at least one of their elderly parents. Preparing and filing an annual income tax return is one important part of this responsibility. This particular task can put extra stress on you because your own income tax return is also due by the end of April. Professionally prepared income tax returns can, however, take the pressure off you.
Filing income tax returns can be complicated, especially if you are unfamiliar with your parent's tax situation. Hiring an accountant to complete the task can save you time, likely cost only $100 to $300, and ensure the return is prepared professionally. The accountant will usually answer all kinds of tax-related questions, and incorporate any tax exemptions, deductions, and tax credits that can lower a senior's tax burden. Furthermore, they can ensure consistency in how the tax return is prepared each year.
When you first take over this task you will need to gather your parents' income tax returns for the prior two years for the accountant, as well as any current year receipts that they have collected. Your role after that becomes simply keeping good records of your parents' tax-deductible expenses, such as medical expenses, including receipts, as well as statements of annual income from financial institutions and pension companies. Sending these to the accountant each year is the last important step.
More detailed information and practical advice about how to manage a senior's financial affairs are covered in Doris Inc., in the chapter called "Financial Planning for Senior Decline." I will, however, provide more tips on this topic in a subsequent blog post.
Shirley Roberts was the primary caregiver of her mother for seven years and is the author of Doris Inc.: A Business Approach to Caring for Your Elderly Parents.