Tips for filing taxes as a guardian or power of attorney.

by | Feb 17, 2021 | Blog, Fiduciary, Guardianship

Tax season is just around the corner and with it come feelings of panic, dread, and procrastination. Now, imagine not only doing your own taxes, but taxes for someone else. Guardians and agents serving under a power of attorney often have to file taxes on behalf of a ward or principal. This can be a daunting task. But fear not! We have complied a list to get you started.

First and foremost: when in doubt, hire a professional! A certified public accountant (or CPA) is your best line of defense against the IRS. A good CPA will be able to guide you through tax season and will make your life easier.

The first document you will need is IRS Form 56 – Notice Concerning Fiduciary Relationship – alerts the IRS that you are serving in a fiduciary role for the taxpayer. You will need this form if you plan to sign a tax return on behalf of a another individual in your capacity as guardian, trustee, personal representative, or as agent under a power of attorney.

It is always helpful to have previous years’ tax returns. If you are unable to locate them, you may have to request the taxpayer’s transcript. There are several ways to do this. In our experience, the best way to request a transcript is to call. Your CPA might also be able to request a transcript for you.

If you need to be represented in front of the IRS (for example, disputes about taxes, unpaid taxes, etc.) then you will need IRS Form 2848 – Power of Attorney and Declaration of Representative. This form authorizes an eligible person (essentially a CPA or attorney) to represent you to the IRS. A guardian is not an eligible person.

Indiana offers the Unified Tax Credit for the Elderly. To be eligible an individual must be over age 65 and have less than $10,000 in taxable income. This credit ranges from $40 to $140. You will either file Indiana Form IT-40 or SC-40, depending on whether you are an individual or married filing jointly. Do not file both forms.

Medicaid has certain rules for tax returns – namely that tax refunds are not considered an asset for 12 months after receipt. You can check the Medicaid Eligibility Policy Manual ( for more information. If you have a client that receives Medicaid, be sure to mention this to your tax preparer as there are certain deductions available for Medicaid recipients. Also, taxes paid are deducted from the Medicaid liability amount (you have to submit proof of payment to the FSSA). Medicaid rules are tricky overall so consult an experienced elder law attorney if you have questions.

Finally, remember what is considered taxable income:

  • Supplemental Security Income (SSI) payments are not taxable income.
  • Social Security Retirement income and Social Security Disability Income (SSDI) might be taxable income. The rules are complex, but generally if Social Security Retirement or Disability income is your only source of income then it is not taxable, but be sure to confirm this with your tax professional. For more information go here:
  • VA disability benefits and pension payments are not taxable.
  • Economic Impact Payments (stimulus checks issued during the COVID-19 pandemic) are not taxable income.

Remember that Tax Day 2021 is Thursday, April 15. Happy filing!

Special thanks to Jenny Deaton, Scout’s Fiduciary Officer, for her help writing this article!