I need to file a post-bankruptcy T1 return but the Preview Watermark can’t be removed. I propose to send it to the trustee with the Preview watermark. What would you do? I rather thought the trustee does these returns.
The Bankruptcy Trustee is only required to do the pre-bankruptcy and any in-bankruptcy returns. Post-bankruptcy returns (pro-rated if applicable …but generally are not) are the taxpayer’s responsibility and are prepared/filed just like any other taxpayer’s return.
You can’t file a 2020 Post-Bankruptcy Return yet.
You have to let the year end first.
I guess his 9 moths is up; the client sent me his information so I assume the trustee is asking for it. I will prepare it as best I can, filling out T4As for OSAP and CERB. Then I will send it to the customer and let him give it to the trustee. That is what i did in January - his bankruptcy was dated January 7, 2020 so I just did the best I could. The trustee isn’t one of the big names in the business.
Send you a private message. You are being lead to the wrong thing. My phone is in the message. Call as you need a redirection. Your client is not telling you what is needed.
As discussed off line:
- Try to find out the remainder of the court order/conditions - They will be in writing.
- Don’t focus on the tax return this early.
You have my number if we need to discuss this again.
Thanks, Tim! I have reached out to the client for more information. I appreciate your willingness to help. I also appreciate this resource provided by Tax Cycle!
Horst & Randy,
This is a quick point of clarification re post-bankruptcy returns.
Although most trustees in bankruptcy state or seem to infer upfront that they will handle all unfiled tax returns, in my experience most complete only the pre-bankruptcy sub-year for the year of bankruptcy, plus the in bankruptcy stub-year and subsequent in bankruptcy years.
Rarely, if ever, do trustees in bankruptcy prepare the post-bankruptcy stub year.
Horst, your client is simply letting you know that the trustee in bankruptcy is not responsible for the post-bankruptcy stub-year for 2020. This should be prepared during the normal filing time frame. In the early 2000’s when I worked in Ontario as a sub-contractor for other firms, we prepared these post bankruptcy stub years as early filing discount returns in October for the subsequent tax season. These were returns for very simple returns with minimal claims. We stock piled the paper returns and issued the client an early cash back check based on a discount cash back agreement. Most of these cash backs were based on rent rebates, eligible dependents, child amounts, and/or disability tax credit certificate. The former Ontario refund based on Rent Rebates have long ago transitioned to a benefits programs.
As Randy stated your client either misunderstood or was misinformed that he is required to file the post-bankruptcy 2020 stub year early. Instead, the trustee in bankruptcy was letting him know that he was responsible for filing that period on his own.
PS - I have prepared unfiled pre-bankruptcy years for clients who were fully discharged. They were issued the relevant refunds and benefit checks. I am not sure if that would still be current CRA refund and benefit payments policy. However, if the taxpayer if a fully discharged bankrupt that may be the case.
PS - A taxpayer who may wish establish credit in post-bankruptcy would wish a post-bankruptcy stub-year DRAFT tax return to show proof of income and an estimate of future tax debt to his bank or bank-issued secure credit card. They normally also need to show an income and expense budget plan.