How to Avoid IRS Issues When Filing Someone Else’s Taxes

Most people have enough trouble preparing just one tax return!

But two? Forget about it.

We hate to break it to you, but just because you don’t like taxes doesn’t mean you won’t be called to help out a friend or family member at some point in your tax-filing lifetime.

Yes, it may not happen all too often for most taxpayers, but it happens nonetheless. There are dozens of situations that might prevent someone you know from filing a tax return, and if you find yourself in a position where you need to lend a helping hand come tax season, you’ll need a complete set of information to work from.

So, that’s what we’re here to offer. From the legal basics of filing taxes on someone else’s behalf to the specific details you need to remember depending on the reason you’re filing for someone else, we’ve got you covered.

A Quick Reminder

Whether you’re just lending a hand to your neighbor during tax season or helping a family member who is in the hospital, you’re taking on quite the responsibility. We won’t belabor the point, but we do want to explain very quickly why.

The taxpayer, not the preparer, is ultimately the person who is on the hook for their taxes, whether or not they’re filed perfectly. Even a tax preparation company technically isn’t on the hook, though some will guarantee support in case the IRS has any questions or chooses to audit.

Fortunately, if you’ve prepared a tax return for someone else, they can list you in the “Third Party Designee” area above the signature on their tax forms. This gives the IRS the option to speak with you about the return, whether that may be missing information or processing status.

Common Causes for Filing for Someone Else

A Loved One Has Died

When someone passes away, his or her taxes still need to be filed—and this can be an emotionally draining experience. Typically, the estate administrator or executor will take care of it, but if a person has not been specified, you may be required to step in.

Beyond the emotional component of filing for a deceased loved one, probably the most difficult part of filing is finding the necessary documents, since you aren’t the person who has been keeping track of them. Fortunately, the tax filing process may not be too difficult beyond that; most tax preparation firms and tax prep software give you the option to identify that you’re filing for a family member who has passed.

Someone Is Sick or Unable to File

If someone is sick for an extended period of time, they may grant you power of attorney to sign their return. This can be a very useful tool if someone is in the military or taking an extended international trip (typically 60 days), too.

If your spouse is unable or absent when filing your joint return, you can sign for them—assuming you have the authorization. Meanwhile, you don’t need authorization to file for a minor child. To receive the power to sign another’s federal tax return, your loved one will need to file Form 2848.

Your Child or Teen Needs Help

Many children will end up needing to file a tax return before they reach adulthood. If your child starts investing, working a summer job, or earning any other type of income, it may be time to file their first return.

There are a number of boxes to check before your child needs to file. For example, their investment income needs to be over a certain total, their self-employment income needs to be over a certain total, and so on. While this may be your child’s first tax return, they still need to file and sign it—but of course, you can help them or file on their behalf.

Whatever your child’s specific financial standing, it’s a good thing to start discussing taxes when they take their first job. Although you may hold their hand through the process for a few years, this can be a learning opportunity that will help them for decades!

Unsure? Ask for Help.

There are certainly some legal hoops you may need to jump through when filing taxes for a loved one who is otherwise unable to, but don’t let them overwhelm you. If a loved one thinks they won’t be able to file this year, it may be time to loop in some help from a professional.

Even if you’re dealing with a complex emotional situation, it’s worth asking for help. Research can take you farther than you think, but for the rest of the way, you may just feel more comfortable—and at ease—with some additional guidance.

Filing for someone else can be stressful, yes, and it can certainly be draining. But you can do it. We promise.

Leave Comments

Free eBook

Tax Settlement Options

Download Now
Having a tax debt is stressful. We can help.