When it comes to managing your finances—especially in situations involving illness, aging, or absence—Power of Attorney (POA) can play a critical role. But not all POAs are created equal, and it’s important to understand the distinction between general powers and the specific authority needed to handle tax-related matters.

At Wilson Accounting Group, we frequently help clients navigate the tax implications of Power of Attorney. Whether you’re caring for a loved one, planning your estate, or simply want a backup in case of emergencies, here’s what you need to know.

A Power of Attorney is a legal document that authorizes someone else—called the agent or attorney-in-fact—to act on your behalf in financial, legal, or medical matters. It becomes especially useful when you’re unable to manage your own affairs due to illness, absence, or incapacity.

However, just having a general POA doesn’t automatically give someone the ability to file your taxes or communicate with the IRS.

From a tax perspective, the IRS requires a specific form—Form 2848: Power of Attorney and Declaration of Representative—to allow someone to:

• Sign your tax returns
• Communicate with the IRS on your behalf
• Access confidential tax information
• Represent you during an audit or tax appeal

Even if someone already holds a general or durable POA, they must complete and submit Form 2848 to be recognized by the IRS for tax matters.

Tip: If you’re managing a family member’s finances, don’t assume your general POA covers taxes. Filing Form 2848 is essential for IRS recognition.

Here are the most common types of POA, and how they differ:

General Power of Attorney

• Grants broad authority to handle financial and legal affairs.
• Ends if the principal becomes incapacitated.
• Not valid for tax matters without Form 2848.

Durable Power of Attorney

• Remains in effect even if the principal becomes incapacitated.
• Commonly used for long-term planning and elder care.
• Still requires Form 2848 for IRS communication.

Limited or Special Power of Attorney

• Grants authority for specific tasks or a limited time period.
• Ideal for single financial transactions, such as selling property or managing a single account.
• May be used for a one-time tax filing, with Form 2848 specifying the exact tax years and forms involved.

Medical Power of Attorney

• Allows the agent to make healthcare decisions.
• Does not grant any financial or tax authority.

Having the correct POA in place ensures your financial matters are handled smoothly if you’re unavailable. More importantly, when it comes to taxes, having the right documentation for the IRS avoids costly delays, missed deadlines, or miscommunication.

• Retain your 1095-A and provide it to your accountant during tax season.
• Let your tax preparer know about any changes in income or household size during the year.
• Respond quickly if your return is rejected for missing Form 8962 or 1095-A—we can help correct and resubmit.

At Wilson Accounting Group, we often work with individuals and families who need to establish or validate Power of Attorney for tax matters. We can help with:

• Filing IRS Form 2848
• Coordinating with tax professionals, financial institutions, and legal advisors
• Providing tax representation if you’re serving as someone else’s POA
• Advising on the right type of POA for your needs

If you or a loved one is setting up financial safeguards or managing someone else’s affairs, having the correct Power of Attorney in place is critical—especially when it comes to taxes. We’re here to help you navigate the paperwork, avoid common pitfalls, and ensure you stay in compliance.