US resident receiving stepmother's estate. - david ingram expert cross border non-resident income tax help and preparation by fi

QUESTION: Hello David
I'm a Canadian citizen, alien, US resident.
The BC Public Trustee took charge of my stepmother before she died. The trustee sold her 2 houses and other holdings. They will transfer the resulting cash to the co-executor the Royal Trust, following probate.
I am a co-executor of the estate. The Royal Trust says I must file form T2062 and a tax return.
I looked at the form on line. It appears to be directed to persons who sell real property.
My question is: 1. Am I required to file this form. There is nothing in the estate now but money. The houses were sold before she died. The Royal Trust said they will satisfy Canadian tax requirements for the estate before settling the estate.

Thanks for you help

david ingram replies:

As described, the public trustee is / was responsible for filing the Canadian tax returns to report any capital gains and other income that your step mother might have received while alive and up to her date of death.. 

If all the estate was then cash and it has been transferred to an Executor or executors, the executors will be responsible for filing a T3 estate return to report any earnings on the cash from the date of death. 

The executor can pay tax on the estate income and not disburse anything until ready.  That means that any interest earnings left are after tax dollars and should not be taxable to you in either Canada or the USA.

Any monies dispersed to the heirs is then tax free. However, form T2062 is required to be dealt with if there is a non-resident beneficiary from a trust. Since the estate is all cash, it will be a simple  document to file.  If there was a rental house and /or a  lot of securities, it can be daunting.

If you look closely at  page two of the instructions for the T2062, you will find the following.

Trusts and estates should include:
a copy of the trust agreement, indenture, or will; and
copies of the most recent income tax returns from the treaty
country; or
a letter from the tax authority in the treaty country confirming the
trust's residency status.

And, equally important, if you receive over $100,000 US, you have to file US form 3520.  Look at the bottom two questions (7 and 8) on Schedule B of your US 1040.

Hope this helps


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This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.


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