Deceased Person (Final Return) & Estate Returns
You are assigned as the executor of the estate and not sure what to do next. We can help you to complete your responsibilities and ease your stress of not knowing what is next.
Being an executor comes with a lot of responsibilities and risks. We will walk you through our step-by-step guidance to accomplish your responsibilities in the best tax-efficient way.
The steps we take in the process:
- We provide our expert guidance on your responsibilities as an executor
- We help you to complete the paperwork and documentation required by CRA
- We prepare the final, optional, and testamentary trust returns
- We help you to obtain the Clearance Certificate from CRA. Tax Clearance Certificate protects an executor from tax liability in the event CRA later finds additional taxes on the deceased individual or the estate.
Remember! If you earned income as an executor, you have to report it on your personal income tax return.
Return Types for a Deceased Person
There are three different types of tax returns for a deceased person:
1. Final return
Final return is a mandatory tax return to be filed for the year of death. A final return, in many aspects, is similar to regular personal returns; however, there are important exceptions such as filing deadlines or tax calculations.
Final returns are more generous with respect to certain tax credits; for example, you can claim the medical expenses for the two years prior to the date of death. A knowledgeable and experienced tax professional will make a thorough usage of special credits and deductions available to deceased returns.
2. Optional returns
Optional returns, as the name suggests, are not mandatory; however, they may result in significant tax savings. Optional returns will generate the maximum tax savings if the deceased person's situation has the reasons to file.
The law allows up to three optional returns. The complexity of the optional returns requires a qualified tax expert to help you understand the process and the requirements thereof. Schedule an appointment with us to determine whether filing an optional return would be beneficial under the circumstances.
3. Trust return - Testamentary Trusts
The estate of a deceased person is a type of trust called testamentary trust which is created on the day an individual dies.
A testamentary trust is a separate taxable entity from the deceased individual; therefore, it must file its own tax return. Any income earned by the estate from the day after the date of death up until the estate’s assets are distributed to the beneficiaries, must be reported on a T3 Trust Income Tax and Information Return. A T3 return may only be filed by the executor indicated in the will, or by an administrator appointed by the court in the absence of a will.
Contact us today to book an appointment for a free no-obligation, and confidential consultation to discuss the tax issues pertaining to the deceased and trust returns.
Take advantage of our free, no-obligation consultancy session and improve your financial life by learning the complexities of your tax matters and the solutions from a professional!
