The aging baby boomer generation means many adult children are taking on new roles of caring for their parents. During tax season, assisting aging parents is crucial for accurate returns. If your parent is already using a tax professional, discuss the types of documents you may need to help at tax time. Identifying the required documents early allows you a chance to plan, organize, and gather the necessary information.
Basic Documents for Filing Taxes for Aging Parents
Every person has a unique set of circumstances for daily living, income, and expenses. Saving receipts, invoices, and/or other documents will help at tax time. Remember, having too much information is better than having too little.
Social Security Statement
Prior to January 31, the U.S. Social Security Administration mails out a social security statement for tax use. The statement shows the total of benefits paid to your parent for the previous year. The final amount is necessary to determine the amount of taxable income. If you or your parent misplaces a statement, you will be able to request a new one online or at your local Social Security office.
Pensions and Other Retirement Accounts
Depending on your parents’ employment history, a pension or other form of retirement account may provide additional income. During tax season, a statement from each pension plan or investment firm is necessary for filling out taxes. Some companies opt to deliver the statement online. If your parent is not computer savvy, you may need to obtain the document for them.
Save all forms of medical statements. Depending on your parents’ income and out of pocket expenses, they may be eligible to receive a tax credit.
- Medical costs
- Dental costs
- Assisted living costs
- Paid nursing or other types of in home care
- Health insurance premiums
- Prescription costs
- Hospital or emergency room bills
- Costs of medical equipment including oxygen, wheelchairs, walkers, and hospital bed.
- Costs of home renovations due to wheelchair or walker use
Interest Received and Interest Paid
Over the year, financial accounts may accrue interest. Your parents’ investment portfolio or a banking institution may yield enough interest to be calculated as income earned. In addition, when paying a mortgage, the amount of interest paid may be a tax deduction.
Provide details on your parents’ current living situation.
- Property taxes paid
- Mortgage expense
- Housing or rental expense
- Heating or cooling expense
Saving receipts from donations to a church or local cause may allow your parents to receive a tax credit. If donating cash, remind your parents to get a written disclosure of the amount. When donating with a check, most churches will send out a statement at the end of the year. You may also use canceled checks and credit card receipts as proof for the amount donated.
Assisting your parents with taxes requires preparation. Finding a tax preparer to help will ensure your parents receive the highest amount of deductions and credits. When using a tax professional, remember to bring the previous year’s tax returns, photo identifications, Social Security cards, and banking information for direct deposit for refunds. At Ernst Wintter & Associates, our CPAs will work with you and your senior parent to ensure they have all of the required documentation and are receiving the maximum deductions. Contact us today to set up a time to discuss how we can assist you and your senior parent in getting ready for next year’s taxes.