After your loved one dies, you may be in charge of filing any related tax returns. This may include the decedent’s last income tax return, an estate tax return, and an estate income tax return. It is important for the person in charge of administering the estate to seek out all applicable tax deductions. One such deductible expense may be the expenses associated with the cost of the funeral.
4 Tips About Funeral Expenses and Tax Deductions
The following is an overview of the tax deduction rules for funeral expenses applicable to estates:
- If the estate’s funds are used to pay the costs of the funeral, those costs can be deducted on the estate’s estate tax return.
- If any funeral cost is relevant to the ceremony or burial and is a reasonable part of the service, it is eligible to be deducted. This may include the costs of hiring a funeral director, embalming and preparation fees, and internment of the body.
- If you choose to report funeral expenses on the estate’s tax return, use form 706. Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims—is the proper place to enter the expenses. Funeral expenses should be itemized on Line 1, Section A, and the total of the expense should be entered under “Total.”
- If the estate was reimbursed for any of the funeral costs, the reimbursed amount must be deducted from your total expenses before claiming them on Form 706. This may include government payments such as Social Security or Veterans Affairs death benefits.
Can funeral expenses be deducted from taxes? When administering an estate, filing tax returns and paying taxes owed are important tasks. In some cases, funeral expenses may be tax deductible.Completing the tax returns for an estate is no easy task for those without the appropriate background and experience. Fortunately, we are here to help. Check out our client testimonials page today to learn more.