Are Funeral Expenses Tax Deductible?

There are so many considerations when you are planning for a funeral, and payment is a big one. Part of determining how best to pay for the funeral of a loved one involves whether or not you’ll be able to pay upfront or will need to rely on the estate to pay for a portion of the services. Some people accept financial assistance from friends and family, too. Each of these considerations is important in determining whether or not your funeral expenses are tax deductible.

Final Medical Bills and Burial Expenses

While medical bills are often tax deductible if you are itemizing your expenses, burial expenses and all the associated costs are generally not deductible. According to the  IRS website, only medical expenses are tax deductible for individuals — not the funeral or burial costs.

Funeral Costs Paid by the Estate Are Tax Deductible

While funeral costs paid by friends, family or even paid from the deceased individual’s account are not deductible from your annual taxes, the estate of your loved one can take a deduction on these costs. Not all estates are large enough to qualify to be taxed. If the deceased’s state is taxable, then executors are able to recoup some of the costs of the funeral and burial by claiming them from the estate. If a government organization such as Veteran’s Affairs or Social Security offset some of the funeral costs, these amounts cannot be claimed for deductions.

Claiming Your Tax Deduction

In estates large enough to be taxed, it is best to consult a tax preparation professional or an accountant. If you are calculating and submitting taxes on behalf of the estate, you will need to use Form 706, for U.S. Estate Tax Returns. Specifically, you will use Schedule J to itemize the funeral and burial expenses on behalf of the decedent. Responses should be placed in Section A, Line 1 of this form.

If family or friends help offset the cost of the funeral, this does not necessarily have to be claimed when you’re preparing your deductions. This deduction may help preserve the estate as it supports future family members. When you have questions about planning or paying for a funeral, contact the friendly professionals at  Mountain View Funeral Home and Cemetery  at 480-832-2850. We have been serving the Mesa, Arizona community for generations, and are always willing to provide answers.