Personal Finance

CRA and filing taxes for deceased

  • Last Updated:
  • Apr 21st, 2017 8:46 am
[OP]
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CRA and filing taxes for deceased

I am working on a deceased family member's tax return. All the paperwork (finding, organizing, etc.) is a living nightmare.

The deceased has been negligent over many years in filing their taxes. For 2016, I have done some calculations and there will be amounts owning to CRA. Rather than filing when I have all the paperwork, I will file what I have now, pay the current amount owing, and file at a later date an amended return.

However, is there a cap on how many amended returns one can file for the same year?
Last edited by Pavel on Apr 17th, 2017 4:16 pm, edited 1 time in total.
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I don't believe there is a limit on the number of amended returns. If you need to have it corrected/amended, just refile with the backup document(s).
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Mar 13, 2012
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I can empathize with your situation. At least the friend for whom I am executor was up to date with taxes, but I still had to file for re-assessment of the final return because of an incorrect information slip. A couple of things to note, at least from my experience:

- the re-assessment took eight months (website says eight weeks. When I phoned CRA at the 12 week mark, I was told to wait another 6-7 weeks. It turned out to be quite a bit longer.)

- when taxes are owed, interest is charged from the due date of the original final return filing to the date the notice of re-assessment is sent. Interest rate is currently 5%, compounded daily.

- when I phoned CRA at the twelve week mark, the agent said to pay what I thought the owed amount was asap to avoid compiling interest. I was pretty accurate in my estimate, but still owed considerable interest. The CRA had actually "misplaced" part of my payment, but did find it. That is how I know about the interest charge extending to the date of the re-assessment notice, as the interest amount was reduced once the payment was found.

One good thing, the issuer of the incorrect slip has just reimbursed the estate for the interest. Again, that took a bit of time with letters and phone calls.
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Feb 8, 2017
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no limit but when you file t1 adjustment returns you have to submit all of the relevant backup (t slips, etc) that pertain to the line number you are amending. make sure you have lots of copies if you have to file many t1 adj returns. seeing as you are paying an amount now and will be minimizing penalty/interest i would wait until you have everything lined up and submit one adjustment.
[OP]
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Jun 22, 2004
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Thanks everyone. I had to call CRA today any ways I confirmed what you all have been saying.

On another matter. Is anyone familiar with form T4RSP and RC249?

The CRA rep may have become confused telling me that I can claim the difference between the FMV ($1000) of the RRSP and the amount of investment sold in Box 34 $1500 where Box 34 is higher. She told me that I can claim this difference as a deduction. I think it should be claimed as income because the "amount of investment sold for" was higher? Or does the latter mean that the deceased bought the investment for that price? If so, the cheque I received was for the higher amount of $1500 (Box 34).

Then again, maybe form RC249 may have been incorrectly completed by the financial institution because it refers to Box 34 which is not the amount on the T4RSP Box T4. It is the FMV at the time of death and it is less.
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Pavel wrote:
Apr 19th, 2017 12:36 am
Thanks everyone. I had to call CRA today any ways I confirmed what you all have been saying.

On another matter. Is anyone familiar with form T4RSP and RC249?

The CRA rep may have become confused telling me that I can claim the difference between the FMV ($1000) of the RRSP and the amount of investment sold in Box 34 $1500 where Box 34 is higher. She told me that I can claim this difference as a deduction. I think it should be claimed as income because the "amount of investment sold for" was higher? Or does the latter mean that the deceased bought the investment for that price? If so, the cheque I received was for the higher amount of $1500 (Box 34).

Then again, maybe form RC249 may have been incorrectly completed by the financial institution because it refers to Box 34 which is not the amount on the T4RSP Box T4. It is the FMV at the time of death and it is less.
I think RC249 lets you claim the decline as a deduction since the FMV at death would have been reported on the deceased return. Did you read the instructions for RC 249 on the cra website? http://www.cra-arc.gc.ca/E/pbg/tf/rc249/rc249-16e.pdf I would also suggest reading this guide for filing tax return for deceased person http://www.cra-arc.gc.ca/E/pub/tg/t4011/README.html

Filing returns for deceased can be confusing. You might consider going to an accountant who specializes in these?
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Mar 13, 2012
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Then again, maybe form RC249 may have been incorrectly completed by the financial institution
As mentioned, this was my experience. One thing that can make a difference is whether or not the RRSP had a designated beneficiary. If so, the FMV at death is taxed in the estate's return, while any increase in value is taxed in the name of the beneficiary. In that case, you should have been issued 2 T4RSP's. It gets more complicated if the death and the RRSP redemption did not occur in the same year.

As that does not seem to the issue in your situation, my suggestion is to phone the financial institution and ask for the estates department. You'll need to provide them with the account no., obviously, and sometimes the deceased's prior address and date of birth. If there was an increase in value from the date of death, as there seems to be, it is hard to understand why the F.I. issued an RC-249.

Good luck!
[OP]
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aubgray1 wrote:
Apr 19th, 2017 8:44 am
I think RC249 lets you claim the decline as a deduction since the FMV at death would have been reported on the deceased return. Did you read the instructions for RC 249 on the cra website? http://www.cra-arc.gc.ca/E/pbg/tf/rc249/rc249-16e.pdf I would also suggest reading this guide for filing tax return for deceased person http://www.cra-arc.gc.ca/E/pub/tg/t4011/README.html

Filing returns for deceased can be confusing. You might consider going to an accountant who specializes in these?
I thought about hiring an account but the cost is ridiculous. Some folks said go hire a lawyer to complete the probate because it's confusing and the mistakes would be costly. I didn't. I just made many inquiries and did my research, like I am doing now. I saved over $5,000 and it was done correctly. Besides, there is only one transaction that seems to be the issue. There are two guides for the deceased. The one you mentioned plus the 78 page T3 Trust guide. I feel CRA is making it difficult to interpret and understand their processes surrounding a deceased return intentionally. If anything, I will call back CRA and speak to different people, but for the most part, CRA's responses have been rather consistent from one agent to another.
kellymisty wrote:
Apr 19th, 2017 9:42 am
As mentioned, this was my experience. One thing that can make a difference is whether or not the RRSP had a designated beneficiary. If so, the FMV at death is taxed in the estate's return, while any increase in value is taxed in the name of the beneficiary. In that case, you should have been issued 2 T4RSP's. It gets more complicated if the death and the RRSP redemption did not occur in the same year.

As that does not seem to the issue in your situation, my suggestion is to phone the financial institution and ask for the estates department. You'll need to provide them with the account no., obviously, and sometimes the deceased's prior address and date of birth. If there was an increase in value from the date of death, as there seems to be, it is hard to understand why the F.I. issued an RC-249.

Good luck!
Thanks. That's correct, there is no beneficiary. The thought has crossed my mind about contacting the F.I. (they have me on file with as Executor as does CRA. However, part of me fears the F.I. will review the file (instead of keeping it closed) and say they made a mistake in issuing the amount of payment. They could insist on paying back the difference. The interesting thing is that the deceased CRA account does not have the T4RSP slip on her file. The slip was sent to me several months ago. Maybe they messed up even more and didn't send CRA their copy.
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The interesting thing is that the deceased CRA account does not have the T4RSP slip on her file. The slip was sent to me several months ago. Maybe they messed up even more and didn't send CRA their copy.
In the case of the FI I dealt with, I was told the slips were delivered to the CRA quarterly - then there's the CRA's processing time. From what I understand, the CRA's initial assessment is based on the "honour system" i.e. taking submissions at face value. Then starting in October, a "matching" program is run to correlate the return with the slips on file.

Obviously, you will do what you want, but if the amount in question is $500, I would still ask the FI about the issuing of the RC-249 slip now. From my experience, you will save yourself time and headaches worth far more than that.

Again, good luck!
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Feb 8, 2017
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Pavel wrote:
Apr 20th, 2017 12:55 am
I thought about hiring an account but the cost is ridiculous. Some folks said go hire a lawyer to complete the probate because it's confusing and the mistakes would be costly. I didn't. I just made many inquiries and did my research, like I am doing now. I saved over $5,000 and it was done correctly. Besides, there is only one transaction that seems to be the issue. There are two guides for the deceased. The one you mentioned plus the 78 page T3 Trust guide. I feel CRA is making it difficult to interpret and understand their processes surrounding a deceased return intentionally. If anything, I will call back CRA and speak to different people, but for the most part, CRA's responses have been rather consistent from one agent to another.
sounds like you have a pretty good handle on things. i don't know the specifics of your situation but i used the T3 return for the CPP death benefit so it was taxed at the trusts low level compared to my level. but that's all i needed the t3 for so that was fairly straight forward. but i agree with you - the language the CRA uses is not exactly plain and simple.
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Aug 17, 2008
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Pavel wrote:
Apr 19th, 2017 12:36 am
Thanks everyone. I had to call CRA today any ways I confirmed what you all have been saying.

On another matter. Is anyone familiar with form T4RSP and RC249?

The CRA rep may have become confused telling me that I can claim the difference between the FMV ($1000) of the RRSP and the amount of investment sold in Box 34 $1500 where Box 34 is higher. She told me that I can claim this difference as a deduction. I think it should be claimed as income because the "amount of investment sold for" was higher? Or does the latter mean that the deceased bought the investment for that price? If so, the cheque I received was for the higher amount of $1500 (Box 34).

Then again, maybe form RC249 may have been incorrectly completed by the financial institution because it refers to Box 34 which is not the amount on the T4RSP Box T4. It is the FMV at the time of death and it is less.
Box 34 is not the amount of investemnt sold. Its the FMV at time of death. You can claim the difference if the investment was sold for less than box34. So in your case you claim $500 in other deduction line 232
[OP]
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sr79 wrote:
Apr 20th, 2017 8:32 am
Box 34 is not the amount of investemnt sold. Its the FMV at time of death. You can claim the difference if the investment was sold for less than box34. So in your case you claim $500 in other deduction line 232
And that's the inconsistency. Box 34 on form RC249 Section II indicates $1000 while on form T4RSP it shows $1500.
On line 2 of Section II it says the investment was sold for $1500.

I guess I have no choice but to contact the FI and get this clarified? Or is the figure for Box 34 just for information purposes and it makes no difference as long as the value of FMV and sold after death value is different (more in my case)? Would the difference be a deduction or considered income?
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Just an update. I talked to CRA again tonight. While they can't say for certain, it appears that the FI screwed up on form RC249 and it should not have been issued. Based on the information I provided them, the $1500 would be the FMV because that's how much I received as a cheque and that is what Box 34 indicates on form T4RSP. I am not entitled to claim any deduction.
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Pavel wrote:
Apr 21st, 2017 12:53 am
Just an update. I talked to CRA again tonight. While they can't say for certain, it appears that the FI screwed up on form RC249 and it should not have been issued. Based on the information I provided them, the $1500 would be the FMV because that's how much I received as a cheque and that is what Box 34 indicates on form T4RSP. I am not entitled to claim any deduction.
What was the FMV the day of death?
For what amount the investement was sold after death?

If its the same amount, nothing to do
If FMV at time of death is higher, deduction in T1.
If FMV at time of death is lower, income in T3

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