Don’t overlook available disability benefits for your deceased loved one
“My dad was severely disabled. He passed last year. I cared for him leading up to that time. Is there any disability support for someone in my position?”
– Carol in Winnipeg
Nothing is certain but death and taxes. When a loved one passes away, families often discover new tax challenges, but some tax resources are available for relief – particularly if the loved one lived with a disability. For instance, surviving family members may claim the Disability Tax Credit for a deceased loved one.
The Disability Tax Credit (DTC) is a non-refundable tax credit, claimable on current and past income taxes (up to 10 years back) and may result in a refund.
Who claims the Disability Tax Credit for a deceased loved one?
Only a person with a disability or their supporting family members may claim the DTC, but when someone passes away, it’s up to the legal representative to file the deceased person’s income tax return – usually that’s the executor.
The executor is the person listed on the last will and testament of the deceased person and carries out the instructions in the will. The executor/legal representative also applies for the Disability Tax Credit for the deceased person.
To become the legal representative, you’ll need to:
- send a letter to the Canada Revenue Agency (CRA) to advise them of your loved one’s date of death
- include the Death certificate
- include the last will and testament
- if the deceased does not have a will, include a self-written letter indicating you’re next of kin.
How do you claim the Disability Tax Credit for a deceased loved one?
Once the CRA recognizes you as the legal representative, you can start the Disability Tax Credit application process.
You’ll need to complete the T2201 form and have a qualified medical practitioner certify the deceased person’s disability. The Disability Tax Credit eligibility requirements are the same for a deceased person.
If the Canada Revenue Agency approves your application, you (the legal representative/executor) may claim the Disability Tax Credit on the deceased person’s final and/or past tax returns (up to ten years).
Keep in mind that as the executor of the will, you are not applying for the Disability Tax Credit, yourself – you are only applying for and claiming the DTC for the deceased person.
As a non-refundable tax credit, the DTC can only be claimed to reduce one’s income tax payable. If the deceased person has insufficient tax payable and cannot claim the tax credit, a supporting family member can transfer the tax credit to claim themselves.
During times of loss, it may be difficult to deal with added financial burdens and tax hoops. Our specialists assist with disabled Canadians and their families in all life circumstances. Request a consultation now to learn about disability benefit options available for you and your family at a time of loss.