Will my parent’s lack of tax filing be an issue for me when managing their estate?

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  • #96604 Reply

      I have a parent who has not filed their taxes in four years. They straddle the line of being impoverished although they do own their house outright. Nearly 70, drawing checks for SS and a retirement benefit from a deceased spouse who has been gone a long time now.  Owns a small business that does not really produce a lot of income after expenses.

      They would not owe if they filed but the idea of having to comb through receipts to be able to write off business expenses is overwhelming and they just avoid it.  I understand that any refund is void after three years.

      They are also not in good health and don’t take care of themselves (yes, mental health is a large issue here).

      No major assets other than the house.

      I am the sole beneficiary and executor of the estate.  I have tried to encourage them to get help or even move closer to me (many states away) but they will not leave right now. 

      When my parent is gone someday, will the lack of filing taxes be an issue for me as I deal with their estate?

      #96605 Reply

        If the estate has assets like a house you will need to clear all the liabilities like taxes. So yes taxes will have to be dealt with.

        #96606 Reply

          Yes, my husband was executor for his father’s estate and we had to file taxes to close out the estate.

          #96607 Reply

            Perhaps check with an elder care attorney in your state. Sometimes they offer no charge consultation.

            #96608 Reply

              I wouldn’t worry about the business. If there’s so little profit after all expenses it’s a hobby.

              #96609 Reply

                There is a certain income amount where you are not required to file taxes. I don’t know the $ amount though, but you can look it up on IRS site.

                Mostly it would be teens that meet that, but some low income elderly people do to….

                #96610 Reply

                  Maybe get a professional involved who can get this straightened out ASAP ( because it will be an issue)

                  #96611 Reply

                    My parents won’t even do a will or appoint executor or anything.

                    My dad passed away in 2016, my mom saw how much we struggled to get things in order etc, yet she won’t do it.

                    Alot because of mental health, it’s so hard to help people we care for when they are struggling.

                    #96612 Reply

                      If they don’t file, it’ll definitely be an issue in the future.

                      #96613 Reply

                        Yes, it will be an issue for the estate and the executor will have to handle the filings.

                        #96614 Reply

                          I’m surprised they haven’t received a letter of penalties and interest for not filing or filing late for both individual & business taxes!

                          #96615 Reply

                            May not be relevant, but per our CPA the IRS was behind on notifying taxpayers of tax discrepancies and the penalties associated. We got a $20 underpayment + fees ‘bill’ on our 2020 taxes in March 2024.

                            #96616 Reply

                              Why are you not stepping in to help this parent? What if they stop doing other important things? Better to be proactive than clean up a mess.

                              #96617 Reply

                                Your situation sounds exactly like mine. A few years ago my elderly father’s natural gas service was turned off for non-payment during the winter (it was setup with a debit card that had expired) so I looked into this for him and he agreed to give me POA because my late mother handled everything financially and he had no clue what was what anymore.

                                I got everything caught up and organized and now take responsibility of all his financial matters, including filing taxes for him. (He gets a small refund most years.) Whatever you and your parent decide, be sure you check to see if property taxes on a paid off home are paid and current!

                                If personal income taxes aren’t current, that’s a sign there are other things likely not being taken care of either. Best of luck.

                                #96618 Reply

                                  Help them to file, get your tax person to do their taxes or find them a professional- it’s a tax write off.

                                  Help them to get organized with business expenses. It doesn’t have to be complicated. Perhaps it’s better if a professional can help them with that.

                                  They might be missing out on some refunds actually if they are low income.

                                  They might be secretly stressed about it if they are procrastinating. Just for their peace of mind is worth getting them some help.

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