And just like that, Tax Day is a week (or less, depending on when you’re reading this) away. Remember back in January when I said it would be here before you could blink?
If you’re one of those who are waiting until the last minute, and my reminders haven’t been enough to put fire under you for getting things submitted before the filing deadline, let’s take a cue from the solar eclipse.
Way back when, people saw eclipses as omens of things to come.
But you don’t have to take the fact that a solar eclipse occurred on Monday as a bad omen… unless you haven’t filed yet. Then things are about to go “dark” real fast. (But you can file an extension! Just make sure you pay what you owe on the 15th to avoid penalties and interest.)
Now, if you’re one of my Redding clients who submitted everything and are expecting a refund but maybe haven’t received it yet, don’t worry. I’ll help make sure it gets to you. When Dennis Fritz CPA prepares your taxes, we follow-up on these things until they’re squared away.
If you have questions, though, or you had a big tax bill for 2023 and want to talk about some tax saving strategies to reduce that burden in 2024, I’m right here:
The burden you carry with taxes can be heavy, but it can be even heavier if you have to take on a loved one’s financial situation as well. So, if you’re feeling the weight of that scenario right now (or expect to in the next few years), I want to unburden you a little by helping you see clearly what that involves and some things to look out for…
Dennis Fritz’s Insights on Being a Financial Caregiver
“Family is not an important thing. It’s everything.” – Michael J. Fox.
The journey into becoming a financial caregiver for an aging parent is one part love, one part duty, and a dash of inevitable stress. You probably thought little about this day coming and when it does, it can take an emotional toll.
But despite the spreadsheets, bank statements, and late-night worries, there’s some joy to be found in protecting and providing for the ones who once did the same for you.
So what does it look like to be a financial caregiver? As an experienced Shasta County tax professional, I can offer some guidance here to help you get started.
Starting the conversation of becoming a financial caregiver
Initiating the dialogue about finances and future planning is crucial. Managing someone’s delicate financial matters, especially when they’ve been a capable adult for most of their life, can be difficult. Make sure to create a comfortable space for open discussion.
Start the conversation by seeing who will handle their affairs if they become unable. If that’s you, ensure they’ve given written consent for you to discuss their financial and medical details with the necessary Redding professionals.
In the beginning, being a financial caregiver might be more informal, involving casual oversight. But, as time progresses and circumstances change, you will most likely end up holding a formal legal responsibility through a power of attorney or guardianship.
Once you are tasked with being their financial caregiver, you’ll also have to face head-on the financial challenges your parents experience in their senior stage of life. These include:
Fraud and identity theft
Elder fraud continues to be a growing problem, according to the FBI. Seniors continue to rack up more than 3 billion in losses annually. Not to mention that only 23 percent of elderly victims report fraud (compared to 43 percent of those in the 20-29 age bracket suffering the same issue).
*You’ll need to ask if your parents have faced fraud in the past. But also, you should continue to regularly monitor their accounts and stay up-to-date on the most common fraud/identity theft scams (note the list of common scams in the linked FBI article as a good starting point for what to watch for).
Mortgage and debt
Despite common beliefs, many seniors still carry significant debts, including mortgages. In a 2020 report, a surprising 46 percent of homeowners aged 65 to 79 still had mortgage debt, and the median total consumer debt for households run by those 65 or older was 31.3K, a figure four times higher compared to 1989.
*Make sure you have a handle on what is still owed, the interest rates, and how you can help them knock those debts out faster.
Inflation’s effect
The impact of increasing costs on consumer goods and necessities, has caused seniors with restricted budgets to feel the stress on their bank account. For example, in 2021 and 2022, over one thousand popular prescription drug prices rose more than 30%.. This, in turn affects their ability to make their retirement last for them. When those monies erode, it can put your parent in a more perilous position in retirement.
*Help them figure out how to adjust investment and saving strategies accordingly.
One component of being a financial caregiver is one I’m intimately acquainted with: taxes. But it’s not something too difficult to manage. It mainly requires the same care and attention you give your own taxes. Things like…
- Staying organized with tax documents is key. Keep meticulous records of their income, deductions, and credits so that returns are filed accurately.
- Look into deductions and credits specific to seniors, like those for medical expenses. These can help your parents save some money come tax time.
- If you’re managing your parent’s investments or business interests as part of your power of attorney duties, you’ll be responsible for reporting any income generated by those assets on their tax return.
- Selling assets on your parent’s behalf, capital gains taxes might apply depending on the sale price and how long they owned the asset.
BONUS TIP: Consult a trustworthy tax professional who has experience with helping people file taxes for aging parents. Taking on the complexity of handling someone else’s taxes can be time-consuming and burdensome, but having a pro in your corner is often the best course of action for ensuring compliance and optimizing tax outcomes.
Financial caregiving is as much about empathy and understanding as it is about financial acumen. Balancing these aspects is key to maintaining both the financial health and the dignity of your aging parent.
Supporting you in every area,
Dennis Fritz
