Tax Preparation Can Be Taxing

Tips and Resources for Seniors with Cognitive Diseases

Tax returns can be confusing for anyone. Social security, tax credits, tax exemptions, stimulus checks – the very thought of tax preparation is taxing on the brain. Too often tax preparation can become incrementally more difficult to understand and manage as people age. Changing technology, complex rules and a lack of sufficient funds to hire a professional accountant or tax preparer can make even common tax issues seem like insurmountable problems.

With tax season in full swing, the May 17 extended deadline to file taxes will soon be here. If a senior in your life is struggling to complete their taxes, or has forgotten to file in the past, there may be more than just a complicated tax system to blame. In many cases, loss of financial capacity, including confusion about tax preparation, may be among early signs of dementia or Alzheimer’s disease.

People with cognitive and memory disorders often have issues managing their money. Early on, a person with dementia may be able to perform basic tasks such as paying bills. But as time progresses, they are likely to have problems with more complicated tasks such as balancing a checkbook or managing taxes. Many may try to hide financial problems to protect their independence, while still others may not even realize they are losing the ability to handle money matters and forget to file their taxes.

If you’re concerned about a loved one, look for signs of fiscal management problems such as trouble counting change, paying for a purchase, calculating a tip, balancing a checkbook, or understanding a bank statement. A family member or trustee should check bank statements and other financial records each month to see how the senior is doing and step in if there are serious concerns. 

Consider creating a durable power of attorney so your family is prepared should someone need to take charge of financial affairs. Be sure to handle the transfer of financial authority with respect and understanding, and while the senior can still understand and approve the arrangement. If it’s too late to sign a power of attorney, a conservatorship can provide the capability to make financial decisions, but becoming a conservator takes time and often involves expensive legal fees.

Tax Resources

If a loved one has failed to file a past tax return because of a disorder like dementia or Alzheimer’s disease, the IRS may abate their penalties for reasonable cause. However, there are a number of low-cost or cost-free tax services for seniors that can help ease the stress of tax preparation and prevent penalties before they occur. These include:

•  Free File Fillable Forms from the IRS are electronic federal tax forms you can fill out and file online for free.
• The IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs provide free tax assistance to qualifying individuals. VITA assists those who make $57,000 or less and persons with disabilities, while TCE is for people who are age 60 and older. IRS-certified volunteers provide free assistance and basic income tax return preparation with electronic filing to qualified individuals. To locate the nearest VITA or TCE site, call 800-906-9887.
• American Association of Retired People (AARP) Foundation Tax-Aide program aids people who are 50 or older and have low to moderate income. The nearest AARP Tax-Aide site can be found by calling 888-227-7669.

Oasis Senior Advisors provides this information to help you care for your senior loved ones. Oasis works to connect health care providers, care givers, older adults and their families to senior living and resources that care for our aging population. To learn more about how an Oasis Senior Advisor can provide needed resources at no cost, call (888) 455-5838. One call can offer many solutions for a senior in need.