Deceased With Death Date in 2020

[Dan Bracuk]

I am attempting to submit a return for someone who died in 2020, but the estate earned income in 2021.  However the software will not create a return for death dates prior to 01-01-2021.

 

I phoned CRA about this and they said that it would be OK if I put in an incorrect death date that the software would accept and then amend the printed copy before submitting it.

 

Is there another way to accomplish this?

[TheTaxSmith]

Hello Dan Bracuk. The advice you said CRA gave you is wrong. Never use an incorrect date of death. Basically the income earned after death can either be 2020 Final return income, 2020 Rights & Things income, or 2021 Estate income. Not knowing what the income is I can't offer a definitive answer. That said income earned after the date of death such as interest on a RRIF or RRSP earned after death is commonly Estate income and gets filed on a T3 return. Income from dividends that were declared prior to death but paid after death would go on a Rights & Things return for the 2020 year. A Rights & Things return is similar to the Final return but is separate and allows additional claims for personal credits. OAS and GIS payments received after death for the month of death go on a Rights & Things return. The Final return includes all income earned and received up to the date of death. Interest paid after death but accrued and earned up to the date of death goes on the Final return even if paid after death. Employment income due to the deceased but received after death may be split over the Final return and Rights & Things return based on the type, such as vacation pay, severance, overtime, and conditional upon when those payments were requested by the deceased. I know that may seem complicated but don't follow CRA's advice for entering a false date, and consider filing a 2021 T3 estate tax return, a 2020 Rights & Things return, and the 2020 Final return.

[Dan Bracuk]

Thank you for the answer.  Can a T3 estate tax return be generated with UFile?  When I look at the Help Index I get nothing useful for T3, trust, or estate. 

For the return I want to generate, on the Interview Setup the only boxes checked are Deceased Person and Investment Income.

[TheTaxSmith]

Hi Dan Bracuk. Ufile does not have a T3 program. You would have to download the T3 from the CRA site. If the estate is a Quebec estate you would also need to complete a Quebec provincial estate return.