Tax returns using Power of Attorney

All Things Legal

By Jane M. Winand, Legal Assistance Attorney

As a result of deployments, reassignments or attendance at service schools, service members and military spouses may find themselves in different geographical locations when it is time to file federal and state income tax returns.

So what do you do if both service member and spouse are not at the same location to sign the tax return? A Power of Attorney could resolve this problem.

The different Powers of Attorney are explained below:

Limited Power of Attorney

A Limited Power of Attorney gives to your agent, called the attorney-in-fact, only specific listed powers. For example, a Limited Power of Attorney may be given by the grantor to the attorney-in-fact so that the grantor’s car may be registered with the state authorities.

A Limited Power of Attorney could authorize the attorney-in-fact to accept a shipment of household goods for the grantor.

The advantage of the Limited Power of Attorney is that if the attorney-in-fact decides to act contrary to the wishes of the grantor, the attorney-in-fact may only adversely affect matters covered by the few powers that are listed.

If the Limited Power of Attorney is to be used to file income tax returns through the Fort Meade Tax Center, the Power of Attorney must clearly state that the attorney-in-fact is authorized to prepare, execute, sign and file the tax return for the taxpayer for a specific tax year. (This year is the 2017 tax year.)

General Power of Attorney

A General Power of Attorney gives the attorney-in-fact the authority to handle anything that the grantor could handle. Thus, a General Power of Attorney can be a very dangerous document if the attorney-in-fact acts in a way contrary to the wishes of the grantor.

The broad sweeping powers of the General Power of Attorney could result in harm to the grantor in all facets of the grantor’s life including life insurance designations, stock and bond transactions, credit card and loan transactions, financial transactions, and the purchase and sale of real estate, motor vehicles and other personal property.

A grantor should execute a General Power of Attorney only after giving the matter much thought and seeking legal advice.

If using a General Power of Attorney for tax purposes, the Power of Attorney must state that the attorney-in-fact is authorized to prepare, execute, sign and file the tax return for a specific tax year. The IRS Form 2848, entitled “Power of Attorney and Declaration of Representative,” only authorizes the representative to represent the taxpayer before the IRS and does not specifically authorize the representative to sign the tax return on the taxpayer’s behalf.

The power to sign a federal tax return using IRS Form 2848 is only granted in the following limited circumstances:

  • The taxpayer is suffering from a disease or injury.
  • The taxpayer is continually absent from the United States (including Puerto Rico) for a period of at least 60 days prior to the date the tax return is due (in most cases April 15).
  • Specific permission is requested of and granted by the IRS for other good cause.

The IRS Form 2848 must include the following statement:

“This power of attorney is being filed pursuant to 26 CFR 1.6012-1(a)(5), which requires a power of attorney to be attached to a return if a return is signed by an agent by reason of [enter the specific reason listed under (a), (b), or (c) under Authority to sign your return above]. No other acts on behalf of the taxpayer are authorized.”

It is advisable to have an expiration date on the Power of Attorney, whether it is a Limited or General Power of Attorney. Thus, the Power of Attorney will become void by a certain date.

The grantor may then decide whether or not to renew the Power of Attorney for a future term.

If the attorney-in-fact has not acted in the best interests of the grantor, the grantor should think carefully before giving a new Power of Attorney to that attorney-in-fact.

If you plan on having your income taxes prepared at the Fort Meade Tax Center, and your spouse is unavailable for the appointment or cannot come into the office to sign the return once completed, you must obtain a Power of Attorney giving you the authority to sign on your spouse’s behalf.

Ensure that the Power of Attorney specifies the applicable tax year of 2017.

Your spouse may execute an IRS Form 2848 and give you the authority to sign the tax return only if your spouse meets one of the three above requirements.

The Fort Meade Tax Center is available to assist service members, retirees and their family members with free federal and state income tax preparation and electronic filing.

To schedule an appointment, call the Tax Center at 301-677-9366. The Tax Center is located at 4217 Morrison St., first floor, Office of the Staff Judge Advocate.

Tax Center Update

The Fort Meade Joint Installation Tax Center released the following figures on the services it has provided since opening in January:

  • Federal tax filings: 167
  • State tax filings: 166
  • Tax preparation fees saved: $60,000
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