# Return for deceased



## Albert (Jan 19, 2012)

My father-in-law passed away in Nov of 2011. I always did their tax return for them with the aid of tax software . All assets were in joint accounts with his spouse. 
Is there complication in doing the return once I compile his income up the day of death?
Is it wise to go to a professional?
Any input is greatly appreciated


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## stephenheath (Apr 3, 2009)

Actually, I did it for my grandfather and when he passed I was surprised how easy it was, although I did have to do another one for the subsequent year because of little bits that came in afterwards... for example in your case if he had GIC's still accumulating interest in 2011 and it took until, say, Feb 2012 to get everything done and moved to the spouse's name, the interest from that time period is still taxable to your father-in-law.


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## OhGreatGuru (May 24, 2009)

I think the example of the GIC's is a poor one. If they were truly jointly owned, you simply prorate the interest up to date of death between the two spouses, and afterwards to the survivor. (If they were not jointly owned it would be as stephenheath suggests.)

But other "income to estate" after death would include CPP death benefit; other pension death benefits, unless they qualify for an exemption; any insurance proceeds that are paid "to estate" rather than to a beneficiary; etc.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/130/dth-eng.html

Actually, one of the main complications is that even though the tax laws are clear, no institution (in my experience) will issue separate tax slips for earnings up to DoD and earnings afterwards. So you have to do your own pro-rating. On a simple income account this is a straightforward straight-line interpolation. But on a trading account you migth have to do month-by month calculations.


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## stephenheath (Apr 3, 2009)

OhGreatGuru said:


> I think the example of the GIC's is a poor one. If they were truly jointly owned, you simply prorate the interest up to date of death between the two spouses, and afterwards to the survivor. (If they were not jointly owned it would be as stephenheath suggests.)


Sorry, I realize the problem is I said "in your case" and I meant to say "like in my case". My grandfather had a couple little GIC's that weren't jointly owned at a different bank from their main banking where everything else was jointly held and it generated a posthumous T5, but the main point I was trying to make is there may not be tons of taxes owing (or tax slips to file) post DoD, but there probably will be some, so it might take two tax returns before it's all wrapped up.


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## OhGreatGuru (May 24, 2009)

stephenheath said:


> ... but the main point I was trying to make is there may not be tons of taxes owing (or tax slips to file) post DoD, but there probably will be some, so it might take two tax returns before it's all wrapped up.


Bin there, done that.


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## OhGreatGuru (May 24, 2009)

To go back to one of Albert's questions, if all assets were jointly held, the tax returns should not be difficult, even if you have to file an estate (trust) return. Unless you find filling in tax returns especially difficult, I wouldn't think professional tax assistance is required. But you are probably going to have to do them by hand, not by software. CRA will send you various guides on request, such as T4011 - Preparing Returns for Deceased Persons and T4013 - Trust Guide. (T4013 is a bit intimidating because it covers all kinds of trusts - you have to wade through it to figure out what is relevant to a simple estate return.)


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## RedRose (Aug 2, 2011)

This makes interesting reading as I will be looking to gather these documents in readiness for my late husband's return. He died mid April 2011. He had completed his tax return in readiness which I filed on his behalf.
I have heard nothing yet, so I will need to read up on this income tax part too...along with everything else I am learning.


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## Albert (Jan 19, 2012)

Thank you both for your input in this matter. Looking at the situation right now I do not think I need to file a trust return. The investments were all jointly held, and consisted of high interest saving account, and income mutual funds. My task I believe is to figure his income to the time of death (Nov 2011) and file a terminal return. Please correct me if you think I am wrong. I have been doing tax returns for my family for long time, but this is the first time that I experienced this situation.
Thanks again,


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## OhGreatGuru (May 24, 2009)

That is essentially right. However, a CPP death benefit is considered as income to the estate after death, not to the deceased. So you may not escape filing an estate return. (For an example of how ridiculous the tax rules are, the CPP death benefit ($2500 max.) is taxable, but any other death benefit is taxable only if over $10K.)


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## OhGreatGuru (May 24, 2009)

RedRose said:


> ...
> I have heard nothing yet, so I will need to read up on this income tax part too...along with everything else I am learning.


Don't hold your breath. CRA is very slow to process final returns and estate returns. They warn you not to expect a response on Final Returns for at least 6 months.


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## Darisha (Feb 11, 2012)

OhGreatGuru said:


> Don't hold your breath. CRA is very slow to process final returns and estate returns. They warn you not to expect a response on Final Returns for at least 6 months.


Lovely. A parent passed last year and my siblings are waiting to split the income tax return from the estate. I could care less but my siblings are pretty much destitute so this will only upset them further if they have to wait six months.


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## RedRose (Aug 2, 2011)

I took every slip of paper that arrived in the mail to the accounting guy. He said not to worry the worst that can happen is that I may have to pay interest on any refunds in case of error as they don't discover right away. I took it all to him to the best of my ability. What rate of interest do they charge per year does anyone know? I am trying to prepare myself, this is so nerve racking stuff.


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## fraser (May 15, 2010)

I have done two of them in the past several years. They were very easy. I used a tax package, I think it was UFile. You need to indicate deceased but CRA does find out about the death via Service Canada. I know this because I had access to both of my parents CRA on line accounts. My access to these accounts were blocked shortly after I had reported the deaths to Service Canada in order to stop CPP payments etc. The POA ceases on death.

In my case the returns were straightforward. Pension income and interest income. On joint interest income, the financial institutions did not seperate out the interest income as at date of death. I did the calculations and reported them. 

I have done real estate transfers, probates, and final tax returns without the assistance of accountants and lawyers. The final tax return was the easiest of the them all-though the ones I did were very simple.

I would not worry about CRA. In my experiences, they have always been very reasonable. I think that they are looking for a fair return. People can make small errors-I have found that CRA look at the broad picture and are not going to 'hang you out to dry' for small errors-in either direction.


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## caricole (Mar 12, 2012)

> My father-in-law passed away in Nov of 2011. I always did their tax return for them with the aid of tax software . All assets were in joint accounts with his spouse.
> Is there complication in doing the return once I compile his income up the day of death?
> Is it wise to go to a professional?
> Any input is greatly appreciated


It is easy...but it takes time

1) Deseased in Nov 2011...you have 6 months to file return for a deseased person

2) They go automatcly 3 years back to see if all taxes are OK...it takes 3 to 6 months before you get the assesements

3) If you do not have ALL information slips....file anyway not to get slapt with penalty for late filing

4) Use T1 ADJUSTMENT for amending de first filing if nescessary

5) As to transfer of accounts from the financial institutions to «ESTATE ACCOUNT» request the «DÉCLARATION OF TRANSMISSION» from the finacial institution, you can fill it in, they can certify it without cost

6) Brokerage accounts are differend...you fill them in (declaration of transmission), theu have to be withnessed by a laywer or notary public...cost involved

I did a few..family and friends....never had problems....exept correcting some that were done by PROFESSIONELS AT BIG FEES

PS:

Condolences for the loss


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## OptsyEagle (Nov 29, 2009)

Darisha said:


> Lovely. A parent passed last year and my siblings are waiting to split the income tax return from the estate. I could care less but my siblings are pretty much destitute so this will only upset them further if they have to wait six months.


I suspect CRA does this because they generate a significant amount of tax revenue when someone dies. They want to make absolutely sure they get their cut before your siblings start divying it up.


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