Are me and my dad in deep sh_t with the IRS?
March 8, 2010 6:18 PM Subscribe
Last year my elderly father became very ill and basically lost the ability to take care of himself and his affairs. He spent most of the year in the hospital and/ or nursing home.
We spent much of the year struggling with his health issues and, in the process, neglected his financial affairs--namely, he didn't file his income taxes (2009 for 2008).
He probably had about 50k of income from social security, dividends, etc.
I recently acquired durable power of attorney to have access to all of my Dad's accounts and I've been working to get a handle on his financial situation.
My questions:
What's a worst-case scenario?
How much trouble with the IRS are we in?
How much in penalties can we expect to pay?
Should we consult a tax professional to help us sort out this situation? If so, what type: tax attorney? H&R Block type outfit?
Any/all advice would be very much appreciated.
He probably had about 50k of income from social security, dividends, etc.
I recently acquired durable power of attorney to have access to all of my Dad's accounts and I've been working to get a handle on his financial situation.
My questions:
What's a worst-case scenario?
How much trouble with the IRS are we in?
How much in penalties can we expect to pay?
Should we consult a tax professional to help us sort out this situation? If so, what type: tax attorney? H&R Block type outfit?
Any/all advice would be very much appreciated.
I think the instructions for the 1040 outlines what to do and what will happen if someone late files.
posted by gjc at 6:24 PM on March 8, 2010
posted by gjc at 6:24 PM on March 8, 2010
This is not legal advice & so on.
It's not that bad. There is a penalty for filing late, which in some circumstances is waived. In any case, the penalty is not large. I believe it is a percentage of what you would have owed. The sooner you file, the smaller the penalty. There may even be a grace period.
I have heard that if you call the IRS, they are actually quite helpful. Ask them these questions.
posted by prefpara at 6:32 PM on March 8, 2010 [1 favorite]
It's not that bad. There is a penalty for filing late, which in some circumstances is waived. In any case, the penalty is not large. I believe it is a percentage of what you would have owed. The sooner you file, the smaller the penalty. There may even be a grace period.
I have heard that if you call the IRS, they are actually quite helpful. Ask them these questions.
posted by prefpara at 6:32 PM on March 8, 2010 [1 favorite]
IAL.
the above are quite correct. CPA or tax attorney - This is an issue to deal with but is not in anyway the crisis your question hints at.
Get the returns prepared and filed. Any penalties will be highly likely to be waived.
H&R Block and any other "I'm not a CPA but I'll do your taxes" services are to be avoided.
Cost of the CPA or tax attorney will not be high and is at least likely to be deductible on his 2010 return!
relax, deal with it this year and no problems. Really. It's not a big deal.
posted by BrooksCooper at 6:47 PM on March 8, 2010
the above are quite correct. CPA or tax attorney - This is an issue to deal with but is not in anyway the crisis your question hints at.
Get the returns prepared and filed. Any penalties will be highly likely to be waived.
H&R Block and any other "I'm not a CPA but I'll do your taxes" services are to be avoided.
Cost of the CPA or tax attorney will not be high and is at least likely to be deductible on his 2010 return!
relax, deal with it this year and no problems. Really. It's not a big deal.
posted by BrooksCooper at 6:47 PM on March 8, 2010
Best answer: My mother became sick and she (and I) neglected her federal and state taxes for two years. On the advice of my attorney, I contacted an accountant, hauled boxes and boxes of papers that looked vaguely financial to his office, and waited fearfully for the other shoe to drop. About six or seven weeks later, he called, I went and picked up neatly organized boxes of paperwork, signed some forms, wrote some checks, and voilà it was done. The IRS waived the penalties, the CPA charged me what I thought was a shockingly reasonable amount, and no Feds have hammered our doors down. You need a good accountant.
posted by BitterOldPunk at 7:00 PM on March 8, 2010 [6 favorites]
posted by BitterOldPunk at 7:00 PM on March 8, 2010 [6 favorites]
CPA - much cheaper than an attorney and more practical in such a common situation. The attorney does not fill out the papers the CPA does. Save the attorneys for the legally iffy questions. Here, the money is owed. The CPA knows how to pay it.
posted by caddis at 7:09 PM on March 8, 2010
posted by caddis at 7:09 PM on March 8, 2010
Yep - just get a CPA - this is not even remotely rare and a good CPA will get you fixed up with a minimum of penalties.
posted by The Light Fantastic at 8:24 PM on March 8, 2010
posted by The Light Fantastic at 8:24 PM on March 8, 2010
3rd on the CPA suggestion. My father insisted on doing his taxes as his health got worse and missed deadlines for filing his state income taxes and taking quarterly retirement withdrawals.
We're now working with a CPA for the taxes he owes and handling the estate financial patterns. There was a slight penalty for late taxes, but definitely not deep sh*t.
I'd also talk to his doctor because in our situation, we had an authorized note from his doctor explaining he'd been sick, in the hospital et cetera that was included when we filed a waiver request for the IRA withdrawal penalty.
posted by green_flash at 10:50 PM on March 8, 2010 [1 favorite]
We're now working with a CPA for the taxes he owes and handling the estate financial patterns. There was a slight penalty for late taxes, but definitely not deep sh*t.
I'd also talk to his doctor because in our situation, we had an authorized note from his doctor explaining he'd been sick, in the hospital et cetera that was included when we filed a waiver request for the IRA withdrawal penalty.
posted by green_flash at 10:50 PM on March 8, 2010 [1 favorite]
This thread is closed to new comments.
Do not, under any circumstances, go to H&R Block. I don't care how simple and routine you think your return is; I have heard many, many horror stories from throughout the country about H&R Block screwing up people's tax returns.
posted by dfriedman at 6:19 PM on March 8, 2010