Filing taxes after someone has died

Dealing with the death of a loved one is difficult. So, the last thing you’ll want is for a client to have to figure out how to handle someone’s taxes after they pass away.

When discussing a client’s estate plans, consider sharing the following steps with them and their families to alleviate any future stress.

When someone dies, here’s what CRA requires:

• Tell CRA about the deceased’s date of death as soon as possible. Call 1-800-959-8281 or fill out the form on the back of RC4111, What to Do Following a Death (send the form to a tax services office or tax centre).
• If the deceased was receiving any of the benefit and credit payments listed below, contact the CRA as soon as possible to stop the payments and, if applicable, transfer them to a survivor:
  • goods and services tax/harmonized sales tax (GST/HST) credit
  • working income tax benefit advance payments
  • Canada child benefit
• Tell Service Canada the deceased’s date of death by contacting a Service Canada office or call 1-800-622-6232.

Other important facts

• People must file a final return after a family member’s death. On the deceased’s final return, the legal representative of the deceased must report all of the deceased’s income from January 1 of the year of his or her death, up to and including the date of death, and claim all credits and deductions that the person is entitled to.
• Income earned after the date of death may have to be reported on a T3 Trust Income Tax and Information Return. For more information on how to complete the deceased’s final return, see tax guide T4011, Preparing Returns for Deceased Persons.
• The legal representative of the deceased is required to file any tax returns for the years that the person did not file before he or she died.
• If an individual who pays tax by instalments dies during the year, instalment payments due on or after the date of death do not have to be paid.
• The due date for the final return depends on the deceased’s date of death. For more information, refer to RC4111, What to Do Following a Death or tax guide T4011, Preparing Returns for Deceased Persons.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.