The Power In Power Of Attorney
By Sylvia Cannon
Spring 2008
Deployment to a combat zone requires plenty of preparation and planning. No matter how detailed, it is difficult to consider and make arrangements for everything that might happen at home while you are away. Everyone’s life situation is unique, and no two will be identical.
The same can be said for tax returns. Chances are your circumstances are different from those with whom you will serve. Whether you are an active-duty, Reserve or National Guard servicemember; single, married or divorced; just starting out or looking forward to retirement, your preparation for the challenges of deployment will require an understanding of the options available to you, some honest introspection and – above all – communication with close family members and friends.
One of the top items on your financial to-do list should include how you will complete your yearly tax return. We deal with taxes every day, even if we’re not aware of it – we pay taxes when we make purchases, and taxes are deducted from our paychecks. But when you are preparing to deploy, especially to a war zone, tax preparation probably is not at the top of your list of things to consider. But think about it: How will you prepare your taxes? Who will file for you? What will happen to your refund check?
When preparing to deploy, you will meet with a Judge Advocate General (JAG) officer to create a will and power of attorney. We are all generally familiar with the purpose of a will. You may not know about power of attorney, but it is also critically important.
A power of attorney is a document that gives to another person (the agent) the power to act on your (the principal’s) behalf. You will be asked to choose a person to make decisions for you during your deployment. It is one of the most important – and perhaps most difficult – decisions you must make.
A general power of attorney allows the person you have selected to act as your agent to do virtually anything in your name – buy and sell property, open new lines of credit, run up charges to your accounts, withdraw funds from your checking or savings accounts. In the hands of the wrong person, a general power of attorney potentially is very dangerous for you. Keep in mind that you will be responsible for any decisions made by your appointed agent upon your return. So it is vital that you are able to trust the person you choose as your agent – someone you can trust with your money and possessions.
If you harbor any doubts at all about the person you may want to designate as your agent, you should consider choosing a special power of attorney. Also known as a limited power of attorney, a special power of attorney allows your designated agent to perform only specific items on your behalf, such as signing for medical care for your children or enrolling them in school. You enjoy more flexibility in choosing who will buy and sell in your name, maintain access to your accounts and whether a second signature is required to withdraw large amounts of money.
Once you have decided whom to designate as your agent in filing your taxes, make certain to provide your agent with all the documents necessary in order to file – all W-2s, receipts, a copy of last year’s tax return and everything else needed to prove deductions. If you want a tax service or accountant to prepare your taxes, your special power of attorney can specifically spell out your wishes. It is important that your designated agent knows to carry the original power of attorney when meeting with your tax professional.
You can revoke a power of attorney at any time, regardless of the document’s specified date of termination. However, it is up to you to notify your bank, credit card companies and any other businesses your former agent had contacted.
Gone are the days of the verbal agreement and spit-shake. If you want to ensure that all your wishes are carried out, get it in writing! Think, plan, communicate and put everything in writing. When you are at ease about your personal affairs, you will be more likely to fully focus on your duty assignment.
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Sylvia Cannon, a retired Air Force logistics officer and spouse of an active duty Army officer, has been an H&R Block office manager for six years. H&R Block’s 12,800 retail tax offices nationwide can assist servicemembers with any tax or financial concern. Call 1-800-HRBLOCK or visit www.hrblock.com to find the nearest H&R Block location. Military families can learn more about making wise financial choices and find information about H&R Block’s Military Spouse Scholarship Program at www.hrblock.com/military.
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Tax Help For Military Families
Military OneSource is again offering TaxCut Basic Online® by H&R Block free to active duty, National Guard and Reserve servicemembers and their families. Through the Military OneSource website (www.militaryonesource.com), the program guides you through all the required forms and documentation. Tax consultants are available 24/7 by phone at 1-800-730-3802 and by e-mail at taxcut@militaryonesource.com to help you with personal tax-related questions and financial planning.
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