Tax season has begun and some people are having to deal with the tax returns of their deceased loved ones in addition to their own. However, there are different types of documents that must be completed when a person dies.
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Here are the three types of declarations to be completed after a person's death:
1. The final tax return
This is a person's final tax return. She records her income from January 1st until her death, i.e. the income she earned during her lifetime.
“This is the same form as for the regular tax,” explained Yannick Lemay, spokesman for H&R Block.
However, he points out that there is an important difference: a person is considered to have disposed of their property – house, car, RRSP, FEER, etc. – at the time of his death, according to market value. This means she could have additional income.
However, if the person has a spouse who survives them, they can transfer their assets to them, thereby avoiding capital gains being added to their final return.
The final tax return must be submitted no later than April 30 of the following year or six months after the death if it occurs at the end of the year.
2. The declaration of rights and ownership
According to Mr. Lemay, the explanation of rights and property is less common. It is particularly fulfilled if the deceased was on the job market at the time of his death. This statement reports income that the person earned during his or her lifetime but received after his or her death.
Although we are not obliged to do this separately from the final return, it may prove interesting to do it retrospectively, as we can reuse certain tax credits depending on the financial situation, emphasized the H&R Block spokesperson.
The declaration of rights and ownership must be filed within 90 days of receipt of the tax assessment or one year after death, whichever is later.
3. The declaration of trust
This declaration concerns income that is generated after death, i.e. from the estate. This includes, in particular, the death benefit from the Régie des rentes du Québec and the income accumulated in a TFSA after the person's death.
A deceased person's estate has up to one year until the end of the trust's fiscal year to determine. Thereafter, the declaration must be completed within 90 days.