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Power of Attorney


Christian

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A son who is serving as his parents power of attorney has taken $15,000 as a fee for his services in 2017. In having his parent's return prepared he advised he would like to know if he can deduct this expense on his parents' return. My opinion is he cannot , however, as a caution I am submitting this forum entry as I cannot find anything which would allow it but someone here possibly can justify his request.

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On 9/7/2018 at 7:33 AM, Roberts said:

Is the son reporting the income on his tax return?

 

I would deem the expense associated with being a Power of Attorney to be comparable to legal fees which aren't deductible.

They can not be legal fees. because he is not an attorney-at-law.  A POA makes someone an Attorney-in-Fact.  The payments can be for management fees, consulting fees and fees for other services performed.  One possible way to avoid the SE tax would be for the parents set up some sort of trust with the son as trustee.  Since he is not a professional trustee, the payments to the son would would be ordinary income, Line 21.  

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1 hour ago, Roberts said:

the unemployed son charge his parents 

It changes when he hires himself out to non-related parties to do the same work. 

A friend, many years ago, spent several years unemployed while living with and caring for his grandparents (keeping a promise he'd made as a teen).  Once both were gone, he discovered a new profession:  elder care advocate and consultant.  But he wasn't taking care of his grandparents for profit as a job.

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I thank all of you who responded. I determined not to deduct the $15,000 agreeing with most of what was said. I am certain he is not reporting it and of course no 1099-Misc will ever see the light of day. As it turned out the parent's huge deductible medical expenses eliminated any tax due and they are being refunded all taxes withheld. ☺️

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