Final Tax Returns
OVP CPA assists executors and other legal representatives with the final personal income tax return for someone who has died. Preparation includes identifying relevant income, property, deductions and credits, and the records needed to complete the filing.
The tax work can involve more than the final return. Optional personal returns may be available, and income arising after death may require separate estate reporting.
Tax return preparation may include:
- Income reporting: Reviewing income earned up to the date of death and the relevant tax slips.
- Property and investments: Assessing the tax treatment of assets at death, including any applicable deemed dispositions or transfers.
- Related returns: Identifying additional filings that may be required or available in the circumstances.
Coordination with the legal representative helps organize the information and address the filing and payment requirements for both the personal and estate tax work.
Estate Tax Returns
An estate may earn income after a person has died, such as interest, dividends, rent or gains from the sale of assets. This can create separate tax reporting obligations while the estate is being administered.
Estate tax preparation considers the income earned, expenses incurred, transactions completed and amounts paid or allocated to beneficiaries.
Depending on the estate, services may include:
- Estate income reporting: Preparing a T3 return and related schedules where required.
- Beneficiary reporting: Preparing applicable information slips for amounts allocated to beneficiaries.
- Administration records: Reviewing income, expenses, and asset transactions relevant to the tax filings.
The estate’s reporting is considered separately from the deceased person’s final personal return. Planning for the records and timing of subsequent filings supports reporting throughout the administration.
Trust Financial Statements
Trustees need organized financial information to understand a trust’s activities and support its reporting. Financial statement preparation brings together the trust’s accounting records and supporting documents.
The purpose of the statements and the information available determine the agreed scope of work. Depending on the trust, the records may include investment statements, bank activity, property income, expenses and distributions.
Services may include:
- Account reconciliation: Comparing accounting records with bank and investment statements.
- Transaction reporting: Recording income, expenses, asset changes, and beneficiary distributions.
- Financial statement preparation: Presenting the trust’s financial information in an organized form.
Questions arising from the records are discussed with the trustee. Financial information is coordinated with the trust’s tax reporting when both services form part of the engagement.
Trust Income Tax Returns
Trust income tax preparation covers the applicable return and related beneficiary reporting. Filing requirements depend on the trust’s type and circumstances, and an obligation can exist even when no income tax is payable.
A review of financial records, relevant trust documents, beneficiary information and changes during the year identifies the returns, schedules and disclosures needed.
Services may include:
- T3 return preparation: Reporting the trust’s income, deductions, and other relevant amounts.
- Income allocations: Reviewing amounts paid or payable to beneficiaries and preparing required slips.
- Reporting requirements: Assessing which additional information and disclosures apply to the trust.
The engagement includes explanations of filing and payment requirements and the information the trustee should retain for future years. Reporting reflects the applicable rules and the trust’s circumstances for the year being filed.