Income tax returns that an executor must file

The executor of the estate of a deceased person is responsible for filing tax returns on behalf of the deceased person and also on behalf of the estate. I once had a client who was the executor of an estate who asked a professional tax preparer to prepare the return for the estate and was told that "you can't file a tax return for a dead person" and was turned away. The tax preparer was simply wrong. You can, and must, file certain returns on behalf of a deceased individual.

These are the returns that are required to be filed on the death of a person for whom you are the executor:

1. T1 Terminal Return for the year of death. This is a personal tax return for the person who died, as opposed to his or her estate. It will cover the period starting on January 1 of the year of death and ending on the date of death. For example, if the person died on March 15, 2010, the return would cover the period of January 1, 2010 to March 15, 2010. This return is due on the later of either
a) the normal filing deadline of April 30 of the year of death, or
b) six months after death.

2. Any T1 Returns for the deceased person for previous years that the deceased has not filed. They are due six months after death, but since they are already late and therefore subject to penalties and interest, it is best to get them filed as soon as possible.

3. Rights or Things Return. This return does not apply to every estate. It is a return that is filed when there were amounts due to the deceased person which were not paid to him or her yet at the date of death, and therefore were not included in the last T1 return. Examples of the amounts are unpaid work-in-progress for a professional person, dividends that were declared but paid, and farm crops that were not yet harvested.
This return is due on the later of either
a) one year after death, or
b) 90 days after assessment of the T1 Terminal Return.

Your best bet is to hire an accountant or tax preparer who has experience with estate returns. Not all accountants do the same kind of work, so look for someone whose experience is in taxation or estates. One accountant that I really like for estate tax matters is Alan Sawiak of Kingston Ross Pasnak in Edmonton.

If you'd like to read more about taxation of estates (and hey, who wouldn't?) check out a paper I wrote for the Legal Education Society in 2009 called Taxation of the Average Estate.