I am preparing T1-Adjustments for my deceased Mother's 2013, 2014 and 2015 returns.
Her tax preparer did not claim her full-time-care nursing home fees as medical expenses. My T1-Adjustments will correct that oversight.
The CRA permits medical expenses for a 24-month period ending on the date of death. Based on this I’m thinking of filing a T1-Adj reducing her 2014 medical expenses to zero so that they can be included in the 2015 T1-Adj that will include the 24-month claim.
My question... Will the CRA approve the 2014 and 2015 adjustments as described, or are they more likely to disallow them as retroactive tax planning?
Great question!
Because it's a close call between retroactive tax planning and maximizing credits, it's worth doing the adjustment.
UPDATE: My T1-ADJ filings were indeed successful. Applying my Mother’s final two years of medical expenses against the crystalized assets that were reported to the final T1 resulted in a substantial refund to the estate. In hindsight I probably would have been blind to the 24-month medical expense rule had I not taken charge of the tax filings after witnessing a disturbing degree of incompetence from the tax preparer.
Crucial to the eventual filing of the T1-ADJ papers was my reading and understanding of the implications of this readily available and exceptionally fair tax credit that takes into consideration the exceptional costs that are often a part of end-of life care.
The takeaway from my experience? Though there is no denying the stress that comes with the death of loved on, the available 10-year window to submit T1-ADJ filings offers a solution that should be pursued, even well after the fact.