If you think dying gets you out of paying taxes, you are sadly mistaken. While it’s technically true that YOU won’t be paying your taxes after your dead, your loved ones in charge of settling your estate, however, will have to file your final tax return.
Before any estate can be settled, the executors of the will must file a final tax return for the deceased. This will settle any money owing (or owed) before any proceeds are to be divided up.
Filing a final tax return differs from the standard procedure in some ways. Here are some things to remember.
Facts about Final Tax Returns
- You must file on behalf of the deceased, just as you must file when you are alive.
- A final tax return will cover any income or or taxable benefits from January 1 to the date of the person’s death.
- Any income received after a person’s death (a pay cheque, etc) can be filed as a separate return.
- If the deceased was the sole proprietor of a business, and the business’s year-end occurred before the death, you must file by the end of the calendar year.
- You may need to fill out a T3 form
- Executors must sign the forms with their name and title (Executor, etc).
- If the deceased used an accountant or tax preparation service, it’s wise to go to them, as their information will be on file, including previous return documents.
- If you are confused, the Government of Canada has several resources available on this topic online.
You can always talk to the friendly and helpful staff at Chapel Ridge Funeral Home and Cremation Centre in Markham. We are always available to guide you through the entire process – beyond the funeral.