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Welcome to Healthcare Redefined: Advocating for Aging Adults and Their Families, where we empower families to navigate the complexities of aging and healthcare. Presented by Your Nurse Advocate Consulting, we share real stories, expert advice, and practical tools to help you and your loved ones confidently navigate aging with dignity.
We explore topics like creating collaborative care plans, demystifying Medicare, handling healthcare crises, and preparing for the future. Join us as we transform uncertainty into understanding.
Pam: [00:00:00] Welcome back to Healthcare Redefined, advocating for aging adults and their families. We're continuing our season two conversation on getting your affairs in order, because really planning ahead can make such a big difference for aging adults and also the people who love them.
Linda: [00:00:15] That's correct. So in this episode, we're going to be talking about tax implications and tax questions that come up as we age and why it matters for families who want more clarity, less stress, and better preparation, which is very important to all of us. I’m Linda Kritikos.
Pam: [00:33] And I’m Pam Dunwald. These topics can really feel overwhelming, but they are so important. Having the right information and support can help families make thoughtful decisions before a crisis happens. We are joined today and honored to be joined today by Megan Steinfeld, enrolled agent and owner of Cream City Accounting. Megan is an enrolled agent, which I just learned the meaning of what that actually is, and she will explain that further as we go along. It means she's gone through federal suitability checks and passed a three part special enrollment examination covering federal tax planning, individual and business tax return preparation and representation. Enrolled agents also complete 72 hours of continuing education every year, every three years to stay current. Let me do that over again. I had some background noise that distracted me. Megan is an enrolled agent, which means she's gone through a federal suitability check and passed a three part special enrollment examination covering federal tax planning, individual and business tax return preparation and representation. Enrolled agents also complete 72 hours of continuing education every three years to stay current.
Linda: [01:51] Wow, a lot of continuing education. Megan.
Pam: [01:55] So before we begin, I just want to make sure people remember this, that, uh, today's conversation is for educational purposes only. It's not financial or tax advice and every family and situation is different. So please reach out to a qualified professional for guidance based on your specific needs.
Linda: [02:13] And everyone, please make sure to check the show notes. We always have some kind of a resource or handouts and information for you, so make sure you check the show notes for those.
Pam: [02:23] Megan, we are so honored to have you here to Healthcare Redefined. So let's get started with this because we can't wait to hear what you have to say.
Megan Steinfeld: [02:33] Thank you for having me.
Pam: [02:35] Megan, we just want to let's first clarify, tell us a little bit about you, your journey and then what is exactly mean to be an enrolled agent?
Megan Steinfeld: [02:47] Yeah. So I am an enrolled agent. I've been one for about 13 years. I had a more nontraditional journey. I was a librarian who was in charge of the tax forms at my library, and one way or the other, that led me to preparing those tax forms. And so that has always been at the core focus of my practice is information literacy. I want people to have access to information that kind of feels overwhelming. So when I began my tax journey, I wanted to become an enrolled agent because we are federally licensed tax professionals and the only ones who are authorized directly by the IRS. So enrolled agents specialize in taxation, tax planning, and representation, which is anytime you're standing in for a taxpayer to help solve a problem with the IRS. Non-credentialed tax preparers, they don't have any education or knowledge requirements to prepare those returns. Now, some of them do plenty of education, but it's not required. Enrolled agents have passed those rigorous tests. We complete ongoing continue education. We have to do some every year. I probably do get 72 hours every year instead of every three years because there's just so much to learn and so much to stay on top of. And then while some CPAs are tax experts, not all of them focus on tax or focus their education on tax, all enrolled agents are focused entirely and exclusively on areas of tax. And all of our education is in tax topics specifically.
Pam: [04:17] Megan, thanks for clarifying that because I was just going to ask you, you know, I'm sure a question would come up, does all CPAs do taxes and I'm glad you clarified that. So when we're looking at tax questions, what kind of things do you find showing up for aging adults? Or when those adult children are trying to help out their parents?
Megan Steinfeld: [04:39] Yeah. The biggest thing we see is that income can change drastically in retirement and the income sources can become more complicated. You have social security, pensions, retirement accounts, investment accounts. A lot of the time, those with retirement income can come with a lot more tax forms and they're more complicated, or they feel a lot more complicated than the simple W2 people are used to. Plus some of these distributions are taxable, some of them are not. So you often have to be more proactive in knowing how that equation will come together. You have to be more proactive in having taxes withheld than you would when you were employed, so that you're prepaying your tax for the year. So all of these come with more questions and complexities. We often see more major life changes, retirement, widowhood, selling a home which can all kind of create tax consequences. And it's not uncommon that someone new is stepping in to handle things. A lot of the time, that's the spouse who had historically not handled the tax return and now is in charge of it for one reason or the other, or an adult child who's kind of stepping in to help get things organized. So this often just means people need help figuring out what tax documents they're even expecting, how to know if they have everything, what filing requirements they have, or I mean, honestly, just where to get started. So the key question is usually, what do I need to do? Where do I start?
Pam: [06:13] Gotcha. And you know, that kind of leads into my next question is in your experience, Megan, what have you seen as maybe the, the top 1 to 2 mistakes that that families make when they're trying to help an aging adult or an aging parent?
Megan Steinfeld: [06:27] Yeah, I'd say probably moving too quickly, especially when they're trying to do something themselves. Often it's a job no one really wants to do. And so they dive in. They've got a couple forms. They submit something with those. It's not uncommon that I see people when someone new is handling the taxes, the spouse or the adult child, because they started receiving IRS or state Department of Revenue notices. And these are usually questioning the reporting or flagging unreported income that changes the return because they had some things, but they didn't know how to find all the things or how to verify. And so they'll come to me because they miss some of the tax forms, the reporting forms they didn't know to expect. We also see people who have just forgotten about the taxes entirely sometimes because they assume they don't have to file them or because they're overwhelmed and they didn't get to it, or honestly, they just didn't even think about it. It's not top of mind. There's other things going on, and that's okay. It's very common that any one of those things happen, and there are always people who can help if it's too much, and that will just make it a little bit easier just to help you know how to get started and then how to stay up to date. So I would say the other side of that same thing is people waiting until there's a problem to get professional guidance. Some of these things are just more complicated than you want them to be. When, especially when you're talking about some of these retirement accounts or investment accounts and having that help so it's done right often makes things much easier and less expensive even in the long term.
Pam: [08:03] Before I turn it over to Linda, that just made me think of one last question. And you know, when these these, like you said, these spouses that have now found themselves taking over or an adult child, is there anything we could say to ease their mind? I mean, if they've made a mistake, are things fixable? Can they be corrected?
Megan Steinfeld: [08:22] They're always very fixable. A lot of the time it will be fixed on the IRS or the Department of Revenue's side if they have most of the information. So sometimes they'll automatically make that correction and send an update. It's often worth double checking their work because sometimes they're looking at a source of income and they just assume all of it is taxable when maybe we can show that it's not, but there are a lot of options for fixing problems. There is a substantial window of time to get those fixed, and although it can take a while to correct them, it generally is going to be okay. Well, we can get it done.
Pam: [09:03] Awesome. Thank you. And I know that's going to give our listeners some peace of mind. So Linda, I'm going to turn it over to you now to ask some questions for Megan.
Linda: [09:11] So, Megan, this brought up a story and I always wondered about this. My parents were still filing taxes at ages 92 and 93. Now their tax preparer that they went to said that they did not need to do it unless they took out a certain amount in distribution. So they told my mother, no, you don't need to, you don't need to file taxes. But she went ahead and filed them anyway. Can you give me a little bit more information about, you know, do seniors need to file taxes? And how do you know when they don't need to file taxes anymore? And how do they help understand what when it is appropriate to file and not to file.
Megan Steinfeld: [09:55] Yeah. So there's nothing specifically that determines. Well, let me say that again. Retirement alone or age alone doesn't determine a filing requirement. The only thing that will determine that is your income level and the type of income that you're receiving. So normally, if we're looking at someone to see if they need to file, we're going to talk through where their income is coming from to just get a general sense. But my first answer is usually yes. If your only source of income is Social Security, then you likely don't have to file. Depending on the amount, your Social Security may or may not be taxable, depending on any other income you're receiving for the year and the total income you're reporting for the year. Pension income. Ira withdrawals, part time work. Those can often create filing requirements. Maybe in one year when you didn't have one in a prior year. In general, if someone has income over the amount of the standard deduction for that year, they'll need to file. And there we're looking at are you filing joint and what the joint file standard deduction is, or are you filing single, and what the single standard deduction is. Social security is always an extra complication in that calculation because not all of it is taxable.
Megan Steinfeld: [11:10] If anyone has had withholding taken out of any of their income sources, they likely want to file even if they don't have to, so they can have that refunded. And I would say when in doubt, file the return. There's never any harm in filing it if it's not required. There can be penalties if you don't file it when it is required and when it's not required, I will often recommend filing it just as an identity theft protection. So for anyone who expects to not have a filing obligation and doesn't want to file that return every year, the other thing we can recommend is requesting an identity protection PIN from the IRS, which will essentially do the same thing. It's locking down your Social Security number in the IRS database. Nobody can file a return for that tax year without your PIN number. And that becomes really important because seniors are huge targets for various tax scams and identity theft issues. And often that will result in someone filing a fraudulent return to get a fraudulent refund, which then comes back on that taxpayer later on when the IRS figures out that it was incorrect.
Linda: [12:24] Oh wow. That's very interesting. A lot of things for people to remember. So let me just reiterate something. So Social security, pensions, retirement accounts. But you brought something up about part time work or work in general. How does that affect this whole, you know, for seniors? Because I do know that a lot of seniors are working part time or working so many hours per week just because they want that disposable income or, you know, want more money in their war chest because, you know, there's so many things coming out of it these days. So how does that affect them? I mean, do they have to worry about making so much money or not making it, having money taken away from them if they make too much. I mean, how does that work?
Megan Steinfeld: [13:08] Right. I would say it's not always the same answer. And it will depend a lot on what the other types of income that they have. There's a couple of things we consider. Sometimes if your primary income is Social Security, you may want to do some planning to see how much additional income can I have before some or more of my Social Security benefits become taxable? When we're looking at how much of that is taxable, we're looking at rather, it feels like a complicated calculation. You're looking at other sources of income plus half of your Social Security benefits. And that will kind of determine if none of it's taxable, 50% of it is taxable, 85% of it is taxable. So that can be a consideration where additional income, especially if it varies year to year, will change what you'd expect your tax liability to be for that year, because it might make more taxable income because of that Social Security calculation. The other thing that it can do is just change the tax withholding piece. A lot of the time with wages, if it's only part time income, they may not withhold depending on how you've filled out your withholding tax forms, which do feel very complicated and overwhelming. And so it's another thing to take into consideration. Where am I prepaying my federal tax? Is it coming out of my employment income? Is it coming out of other retirement distributions and making sure that all will still make sense for you for the year?
Linda: [14:45] Okay. So what types of red flags would prompt someone to get professional help, rather than just flying off the seat of their pants or just doing it at whim? What flags would you suggest that people look out for to make sure that they get the right help at the right time?
Megan Steinfeld: [15:06] Yeah, definitely. I mean, the biggest thing that sends people to me are those IRS or state Department of Revenue notices where something was wrong. And sometimes the thing that was wrong wasn't that wrong. And it's not a big issue, but it feels like a big issue when that letter is stamped with the IRS logo. I will say this year they've been sending out extra notices that don't actually mean anything because they shouldn't have been sent out in the first place, and that is scaring a lot of people. So anytime the peace of mind of having someone read that letter and explain it in plainer English is helpful. Anytime someone has a big or a new tax complexity, and that might be the sale of a home, and inherited asset. The recent death of a spouse. All of those can kind of change different tax pieces. But really the red flag that you should get professional help is just when the whole process feels complex and overwhelming and just over your head. It is complex and overwhelming when you're only dealing with it once a year or maybe twice, if you do your return and a parent. But professionals can help ease that burden. It is not overwhelming to us. We do this every day and it can just be the peace of mind to know you have that support, that someone is looking at this and telling you you're doing just fine.
Megan Steinfeld: [16:22] And we can also review prior information to help make sure things aren't missed. So when I have someone come in and they say, you know what? My spouse passed away or is incapacitated in some way, they always handled our tax return. I have no idea what I'm doing. I can take a look at their last return, and I can help them make sure we have everything. So maybe I'll say, well, I see we have Social Security, we have your interest. But last year there was a distribution from a retirement account. Do you think there might have been one again this year? And then they can go and see, you know, is there a form for that? Would we expect something? It can also just be a helpful point of continuity. I often have clients give me copies of their revocable trust documents and make sure their children have my information or put an updated copy of my business card with their tax return every year. And that way, when it's time for a child or a spouse to take over, it's a smoother transition because they can know I also have that information already.
Linda: [17:24] Okay, you've provided me with a lot of information, but you know, I just have a quick, I don't know, you may not be old enough for this, Megan, but there was a series called all in the family. I always remember this episode because he got a letter from the IRS and he just got ballistic. He had no idea. He thought, and he had fudged some of his stuff. So he thought they were going to go after him in his house. So he went in and met with the IRS person. He was humble and he had his hat in his hand. Oh, I'm so sorry. I'm so sorry. You know, I really wasn't sure if I should claim my tips for when I drove a taxi, I don't know. And he goes, sir, you forgot to sign your tax return. That's why we called you in here because you needed to sign it. He goes, oh, but now, by the way, since you did not declare those tips on your tax form, we are now going to have to open up an audit. I just thought with all this talk, I just thought that that was kind of like something I always remembered with that because it just is like taxes and people don't really want to deal with that. And it's very scary to most people. So yes, glad to have people like you around.
Megan Steinfeld: [18:36] It is interesting you get the panickers who it is all they can think and dream about until it is resolved and you get the turtles who go into their shell and do not deal with it, and I don't want anyone to have to panic. But the sooner we can deal with things, the better, because it just becomes a lot easier.
Linda: [18:57] Okay. Pam, I'm turning it over to you.
Pam: [19:01] I'm going to steal a quote from Pat. So Pat, if you're listening to this, I'm stealing what you say at our BNI meeting. But he works for Servpro, where they clean up a lot of water damage. They clean up a lot. And so he always says that your worst day is my Monday. Well, I think Megan, you can probably say that as well. You know that our worst day is your Monday. And you know, my husband got a couple of letters in the mail from the IRS. And of course, you know, in all the mail, it's like, oh gosh, I better open that. It says the IRS. And it was just two documents that we, he moved his auto repair shop to our house, to our property. So all it was, was two tax documents acknowledging that his address was changed and they changed it in the system. So it doesn't always have to be bad news, but that's what we always think. So.
Megan Steinfeld: [19:49] Absolutely. I have branded letter openers because so often people will bring me a stack of unopened letters from the IRS because they're too afraid to open them. And then it'll be, yes, we changed your address. We made it like avenue instead of Ave.
Pam: [20:07] It's funny. So, you know, that kind of leads into my next topic. And that's talking about special forms or common senior tax situations. So are there special forms for seniors or, I mean, is every situation different or what do the forms look like with aging adults, Megan?
Megan Steinfeld: [20:26] Yeah, there aren't any specifically any special forms. You're looking at kind of the same thing, which is based on what sources of income you have rather than your age. There is a senior version of just that regular 1040 tax form. The only difference is that it's larger print than the other one. So it's on three pages instead of two. But there are some special filing thresholds and deductions. So there's a slightly higher standard deduction over 65. And how much extra it is depends on your filing status. And then for this year for the returns we're filing this year for 2025 through 2028 tax years. We also have an enhanced deduction for seniors. And so that's an additional $6,000 per spouse. But it is income limited. So it can be reduced below that. And so that's another thing where when we're looking at sources of income, there's lots of different factors at play that if your income changes year to year, a lot of your deductions might change too. I would say it sometimes feels to people like there are special tax forms because their tax documents change in retirement compared to what they were receiving when they were employed. Maybe they're taking more distributions from like an investment account. And so now they're getting different statements with more information, sometimes many, many, many pages long. And so it feels like things are very different, but those forms themselves will be the same.
Pam: [21:53] And the last thing I want to talk about in this section is, when either that spouse we talked about who's become widowed or that aging adult. Do you have any suggestions on what they can do to get organized or what would be a simple system to gather their paperwork without really turning it into a stressful mess?
Megan Steinfeld: [22:13] Yeah. I mean, I say it's always useful to just have a dedicated place for all tax documents. Your last year's return, any tax mail you're receiving, opening those pieces of mail, which not everyone wants to do. For anyone who's always been in charge of their taxes, it's useful to just make a checklist of the tax forms you receive every year. Then you can use it yourself as a reference now and then it's available to anyone who needs help in the future to gather those documents. It's often particularly useful even when preparing your own, because every year things are a little bit different. More and more forms are only ever posted to an online portal rather than mailed to your house. So, you know, at the end of February comes and you're like, I think I should have received everything, but there might be a few more things hanging out there that are only online. So kind of knowing what to expect in some way is super helpful. If you're a caregiver who is stepping in to help, I recommend even before tax season, if you know this is going to be coming, pay attention to deposits into that parent's bank account or your joint bank account if you're a spouse taking over, if there's a payment from someone, if there's money coming in, you can expect they'll probably be a tax form to report that income next year, regardless of whether it's taxable or not. Also, just paying attention before tax season comes to where the tax records are and what tax documents they had in the prior year. That's always the first thing we look to, to help figure out if we have everything for a client. And then finally working on just setting up a system for keeping that list of logins and accounts. Because more and more tax documents are only posted online, the first step is maybe knowing what you're looking for, but a next and more overwhelming step is sometimes knowing how to retrieve it. So starting that process early, especially when you're kind of stepping in can be really helpful.
Pam: [24:09] That's a lot of great information, Megan. And I love the point that you made, so many of our aging adults now, everything is going digital, everything's online. So sometimes I'm sure they struggle even finding them. So someone that has some tech skills or is comfortable with the digital things that can assist them. So Linda, I'm going to go ahead and turn it over to you for the next set of questions.
Linda: [24:35] Megan, you answered a lot of the things that I was thinking about, but there's a couple things I just wanted to review about some unexpected tax issues you talked about like the death of a spouse, but what about if someone is selling their home and or moving into some type of assisted living or a senior living environment? Does that change a lot of the tax, issues that they may have or their tax preparation?
Megan Steinfeld: [25:02] Sometimes selling the home sometimes will create gain reporting. There is some exclusion for the gain on a sale of a primary residence. But if it's somewhere you've lived for 40 years, there might be more gain beyond that. I often see issues here because someone didn't know they needed to report it at all, or there are errors in the IRS's favor because especially if there is a large gain and one spouse has passed away before the home is sold, there are special rules for how to calculate that gain so that creates a single year tax issue. Moving to senior living, it may affect some deductions. Mostly if it's someone who has been itemizing their deductions, it may change to make it more beneficial to use the standard deduction, which might reduce that deduction from what they're used to because they don't have property taxes, maybe some mortgage interest. Generally it doesn't have a large tax impact unless we're looking at itemized deductions shifts. What I do commonly see is that after the move, no one knows where their tax documents are anymore. They were in that filing cabinet in the den for the last 30 years, and now who knows where they are. So that's just something to keep in mind. Have a new place for them that a couple people know about. And then especially when moving into senior living, may also mean one of them is moving into maybe a more medically complex situation. Maybe they have more nursing care, maybe they have lived in or skilled nursing rather than just senior living. Those can factor into the calculation for medical expenses and which and that can include some caregiver costs. So that might also change deductible amounts. Things people might want to be tracking now and submitting with their tax return that they hadn't in the past.
Pam: [26:56] You know, Linda, before you go on, I just had one quick clarification about what you had asked. And so, Megan, we talked about selling the home, the spouse and not finding. I mean, what happens when we talk about those gains, what happens when, say, the last parent has passed and the home is for sale and the adult children are left, are they subject to those same types of things or anything that we could share regarding that situation?
Megan Steinfeld: [27:22] Yeah. Some of that will depend on how the estate has been set up, whether this is going into an estate, if it was listed in a will, if it's going through probate, if it was set up in a revocable trust that's now become irrevocable. One thing to keep in mind is often that will create a requirement to file an estate or trust return, in addition to the parent's final return, with the gain on the sale that would be reported somewhere. Where that is depends on how that estate is set up. But there's, and bear with me, it's very tax jargon. There's something called a step up in basis. So basis is the amount of money you've put into something, kind of your equity in it. That's the amount you can get back out tax free. When a spouse dies, you get a step up in basis, which means to the current fair market value. So if someone passes currently, the fair market value of that house is 500,000, then what is considered your basis in that property also moves up to 500. That's the amount you can get back out before we have any taxable gain. Now, because we're in Wisconsin that's true because we're a marital property state. In other states, you might only get a half step up in basis. So you get to it's a different calculation. So just something to flag there where it does it is specific to each scenario. But because of that there may be or there will be some sort of reporting requirement. There may not actually be taxable income unless that property is held for a while after someone has died, before it's sold.
Pam: [29:00] Gotcha. Thank you for sharing that information. Linda, I'm going to go ahead and let you continue.
Linda: [29:06] Okay. So what is one misconception that you wish families would stop believing about taxes and aging? I mean I think there's a lot out there.
Megan Steinfeld: [29:19] There is a lot out there. The two main ones are about whether you have to file. I see a lot of I'm retired. Doesn't that mean I don't pay taxes or I don't have to file anymore? It is true for some people, it is not true for everyone. It changes taxes, it may not eliminate them. And ignoring taxes in retirement can lead to some really unpleasant surprises, especially when you have retirement accounts that are being distributed or that are required to be distributed and are not being distributed, both of those can create problems. I mean, the other main one is, is it in the same spirit that I am too old to file taxes? Isn't my mom too old to file taxes? Doesn't that stop at some point? And I can't tell you how common that is. But in the US, you are never too old to pay taxes. That's the rule.
Pam: [30:13] What's consistent is death and taxes.
Megan Steinfeld: [30:16] Exactly late until they meet. The last thing is probably just that there is a lot of information out there. There is a lot of information on social media. People can say whatever they want. It doesn't make it true. If it sounds too good to be true, it probably is, unless there's a reasonable explanation behind it. So that is the other thing, is to be really cautious about getting random advice from random people. There's a lot out there. There's a lot of good advice out there, and there's a lot of really bad advice out there. And like I mentioned before, seniors are probably the number one target we see for tax scams. There is never a scenario in which, if you have an issue with the IRS, that you are not allowed to have someone help you solve that problem. That is often the message people get when they get these spam calls is saying that you cannot. We have to resolve this now. You cannot talk to anybody else. That means it's a scam. That is never true. So just keeping that top of mind, protecting that identity information, making sure people have support, if there are any issues so it can be resolved correctly, so they're less likely to be targets of that kind of scam.
Linda: [31:33] Wow. Quite informative. Now it's a little scary for me, but, you know, having someone like you in our corner makes things so much better.
Megan Steinfeld: [31:47] Absolutely.
Linda: [31:48] That's not my wheelhouse.
Megan Steinfeld: [31:50] When I get talking, I will often scare people because there are so many different areas of tax to know about. But there's lots of people who can help with that. So.
Pam: [32:01] I think that's really important. I think we all have to realize, I mean, everyone has their own gifts. Everyone has their own talents, everybody has their own strengths, like Linda and I have ours. Megan, you have yours. We have our estate planning attorney. So, we just want our listeners don't shy away from asking the professionals because they're going to have the correct answers for you. So my last set of questions, Megan, is going to focus on maybe some action items or some action steps, some small wins that maybe we can offer our listeners today. So for someone listening who knows that they need to get organized, what are maybe the first 2 to 3 steps that you might recommend?
Megan Steinfeld: [32:47] I would say, I mean, mostly it's just making sure you have your information organized in a way that is accessible to you and to anyone who might need it. So it might just be gathering your last few years of tax returns or documents, identifying where those are stored, keeping them in the same place, preparing somebody or giving someone that information. It is easiest to prepare someone to help you before you actually need their help. So that could be making sure your spouse knows where it is, where your adult child, that they know where to find that information. Or for adult children asking your parents, hey, I was just thinking, where do you keep your tax information? Theoretically, at some point I'm going to need that. Is there anything that I should know? Sometimes there will be like, oh, you know what? There is this weird stock I inherited that's sitting out there or some odd tax scenario that someone doesn't think about day to day. But when you ask them about it, it pops into their head. And I've seen plenty of people only discover that after someone has passed away. And so that just makes things a little more complicated. So having a checklist of income sources of the tax documents you expect. And this doesn't have to be perfect. Just doing anything. Getting started is better than nothing. So if you don't have these things for past years, just start with your 2020 tax return and your tax documents that was either just filed or that you will file before October. If you've extended one year of tax information is better than no years of tax information. And then just making sure you have a team of people who know where to get the information they need. And like I mentioned a few times, often we have one spouse who's always been in charge of taxes. Make sure you both know where that information are. Make sure your supporting child knows where that is if they might need it in the future, just so that the information is accessible to the people who may need it at some point.
Pam: [34:43] And that brings up a couple more questions along that. And first, I'm going to make a comment. And that comment is, in learning about this and working and helping aging adults get their affairs in order, my husband and I, we each have a book, everything's written where everything is, we even have business cards of the professionals that are assisting us. So I mean,I just keep thinking, what would my kids need to know if something happened? So, we add to it all the time. So it's nothing that needs to be done in a day, but it's a working booklet. But my question is, you've got an adult, maybe the aging parents have passed. And the reason I bring this up a couple times is we're in that situation, getting ready to close on my mother in law's home. But for aging adults and for those adult children, how long do they need to keep tax records after they pass away? How long do you have to keep tax records?
Megan Steinfeld: [35:42] Yeah, that can vary a little bit based on what's going on. Generally I say around seven years of records is plenty safe. Four years is sufficient if that's what you have. That's kind of the gold standard, is at least four years. That is assuming that there's not any complicated kind of business, real estate transactions, that there was no fraud happening on these returns and that the returns were filed. Generally, when we're looking at past returns, once the return is filed, you have about three years to make changes and get a refund. If there's taxes owed, the IRS has ten years to collect those taxes. It'll be different in each state, many of them, including Wisconsin, don't have a time limit on when they can collect things. And then and so usually if we can have four years, we're in great shape. If there's more than that, they may not be required. I wouldn't worry too much about it if you're looking for them and you don't have it.
Pam: [36:43] Okay. Thank you. That really helps to clarify that. And just kind of wrapping up my section, when you're dealing with family, say, aging adults, or those adult children that are talking about their parents or their grandparents? Is there any recommendations or is there any language or verbiage that you can recommend to try and share with the adult child? Sometimes Linda and I find a lot that they resist when people want to kind of take in, take over or assist them, so to speak, but they feel that we're taking over. Are there any suggestions you could give to those adult children and how to maybe make this transition a little easier?
Megan Steinfeld: [37:24] I think the best thing is just to approach it as kind of that support rather than control. You just want to make sure that you'll be ready when it's needed, because the very best thing you can do is a proactive plan. You want to have information before you have to take over. And that makes things easiest. So I think kind of just focusing on kind of reducing your own personal stress as the adult child and avoiding missing details and just letting them know in a collaborative conversation that it's something you've been thinking about and you'd love to just have some information so that you feel more prepared because at some point it will become relevant. It's easier to deal with that before it becomes relevant, nine times out of probably nine.
Linda: [38:09] Right along those same lines, I'm just trying to think of scenarios that those adult children may run into. So say an aging adult passes right around tax time. They're not sure what's been done. I mean, how can they? I mean, I know you can extend. How would that process or what would be a fail safe process that we could use in that situation?
Megan Steinfeld: [38:31] Yeah. If someone were to come to me and that was the scenario there are adult parents Ted had passed. They didn't know where their tax standing was. There's a couple of things we can do to be authorized on that IRS account as a professional. It's there's also options as the beneficiary or the surviving spouse or child that will again, tie in to how the estate and will or trust is set up, how that authorization is made. But once we're able to get that, there are transcripts available through the IRS. That's where we can verify if a return has been filed, if there were balances due, if there was a balance due, that might still be outstanding or a refund owed that hadn't been issued. It's also where later in the year it takes a while to post, but usually by around June we can look at the wage and income transcript. So I could see what income that adult that parent even received during the tax year, in case we haven't gotten the forms or we don't know where they would be. Sometimes there's additional requirements. If, for instance, a child is requesting a refund for their parent who has passed, there's a different form you need to file to claim that refund. So things might be a little bit different than a traditional return, but it's not uncommon for us to help because a parent has passed away in 2026, we need to file a 2025 return. We'll also need to file 2026 returns as that final return. Those filing obligations remain if any income has been received, and so that's just something to keep in mind.
Pam: [40:10] Perfect. Thank you very much. And my last question is Megan, and then we'll let Linda close it up. But what would be one step? And I know at the time of this recording, you know, tax time has just finished. We're in the beginning of a new tax year. But what would be one, one thing that a family can do this week, or maybe one thing an adult child can do, knowing that they may in the near future, take over one step that they can take today or this week to begin that tax prep process.
Megan Steinfeld: [40:43] I would say it's probably just to find out where those tax documents are. Where have they kept them? Where did they put 2025? So if it's for your own taxes, put those papers in one spot and tell the people who need to know. If you're an adult child, check in with your parents, verify, hey, do you file them yourself or do you have someone file them for you? Where do you keep those documents? I just want to file that away in my mental filing cabinet for later. I feel like that single habit of keeping things in the same spot and making sure the people who need to know, know where that is. That can prevent a lot of scrambling later. If you have all your documents, you can throw them on my desk. I'll look through them. I'll tell you what you need. The hardest part is when we only have piecemeal information. So I think that's the easiest thing to do to just make things a little nicer later on.
Pam: [41:34] Awesome. Thank you so much, Linda. I'm going to turn it over to you to kind of wrap up our conversation with Megan.
Linda: [41:40] So you've given us a lot of information, a lot of great takeaways and a lot of things that are really important for our listeners to think about and to start putting together as action items for themselves for this year's tax season and others. But one thing that I've heard a few times from a few of my clients is like, oh my gosh, we're behind. Mom and dad haven't filed taxes in three years. We're behind and we need help. So do they call you?
Megan Steinfeld: [42:14] Absolutely. We do a lot of the work with people who have not filed. We can verify. Do you need to file? And if you do, what does that look like? What information will we need? I have found that often when someone has missed a year of filing, it feels so overwhelming that they shut down and then they miss several more years because it just feels like too much to get caught up. And it's a snowball effect. I will often see people sit down at my desk and tell me about these unfilled years and the things that happened. And to them, it just feels incredibly overwhelming. We can kind of give them an action plan. This is what we need to do. This is what we need to gather. I might give you a lot of homework, but it'll be clear steps of what we need, and that can just ease a lot of that burden. Take that weight off the shoulders. That makes it easier to start doing those tasks, collecting those documents. It's generally not too late to file because if you don't file, they might do it for you and it's often not in your favor.
Linda: [43:12] So, Megan, where can our listeners learn more about Cream City Accounting, and is there any type of checklist or something that we can put into the show notes that could help our listeners prepare for taxes, or just answer some questions or get them more organized?
Megan Steinfeld: [43:30] Yeah, we have our website CreamCityAccounting.com. I'm not sure if we have any forms on there. I think that's still on our list for summer. Things never slow down quite enough to do all of the things we have ideas to do, but I generally direct people to. There's a couple helpful IRS websites that I can link that give some basic information about what types of tax forms are out there, what do they do? When can you expect them? That can often be helpful just to kind of navigate, what are these things I am receiving and is it something I need to keep or not?
Linda: [44:03] That's very, very helpful. Very helpful. Thank you. Thank you very much, Megan.
Linda: [44:08] Absolutely.
Pam: [44:11] Yeah. Megan, thank you so much for joining us today. It's been extremely helpful. And I'm sure that our listeners are going to find it very beneficial, helping us talk through such an important topic.
Megan Steinfeld: [44:23] Yeah. My pleasure.
Pam: [44:25] Yeah. And these conversations are not always easy, especially when it comes to our aging adults, but they make a huge difference for families who want more clarity and who want to have less stress in their lives and better preparation for the future. So, Megan, what is the best way for our listeners to reach out to you if they have other questions or want to learn more about your services?
Megan Steinfeld: [44:47] Absolutely. I would direct them to my website at creamcityaccounting.com. We do have a contact form on there. Usually that'll send me an email that I can reply to. And then we're always happy to set up a call or a Zoom meeting or an in-person meeting just for an initial consultation. If someone is interested in more information.
Linda: [45:07] I know Megan, you're in Wisconsin. I know we have listeners all across the country, in Canada, I mean, are you limited to who you can serve in for the tax season?
Megan Steinfeld: [45:23] As an enrolled agent, we are able to prepare returns nationally. What's limiting is sometimes different state laws. So I have prepared returns in probably 30 different states. It will sometimes just depend on any particular complexities. If I think someone would be better served by someone who specializes in that state, then I will let them know. A lot of states have very similar laws or we can figure out where they're different. Some of them are a little bit more particular, especially if real estate is involved. For anyone kind of outside the US, it gets more complicated. Generally, I would recommend that they talk to someone who specializes in that kind of international tax considerations because those will get much more nuanced depending on where your income is coming from.
Pam: [46:13] Thank you for that. And again, we just want to remind our listeners that today's episode was shared for educational purposes only. And please don't take it as financial or tax advice because we know that your situation is different. Everyone is different. So please connect with a qualified professional or reach out to Cream City Accounting for your specific needs. And don't forget to check the show notes for resources related to this important episode. And if this conversation has been helpful, please consider sharing it with a friend, family member, or caregiver who might need it as well. And be sure to subscribe to Healthcare Redefined advocating for aging adults and their families so you don't miss the rest of season two. And we're so glad you're here with us today. Thanks. So until next time, take care of yourself and the ones you love.