Are Funeral Expenses Tax-deductible?
If you’ve recently paid for a funeral, you may be wondering whether or not you’re eligible for a funeral expenses tax deduction. While a tax deduction could be helpful (especially given the enormous cost of funerals), it isn’t in the cards for everyone.
Are funeral expenses deductible?
The short answer to this is no -- funeral expenses are not tax-deductible in the vast majority of cases. In order for funeral expenses to be deductible, you would need to have paid for the funeral expenses from the estate’s funds that you are in charge of settling. The taxes are not deductible as an individual, only as an estate.
What makes burial expenses tax-deductible?
Funeral expenses can be deductible for some estates that used the estate’s funds to pay for the funeral expenses. In most cases, however, estates aren’t required to pay federal taxes and aren’t eligible for a tax deduction due to this. The IRS requires estates with a gross value of $11.58 million to file a federal tax return. If the estate you’re settling is less than this, you wouldn’t need to file a federal tax return and wouldn’t be able to claim the funeral expenses.
What about state taxes?
There are cases when your state requires the estate to pay taxes regardless of its federal tax status. Each state varies in its requirements and most states don’t require estates to pay taxes. The following states require you to pay estate taxes regardless of your federal tax eligibility:
- Connecticut: Estates over $5.1 million in gross value
- Hawaii: Estates over $5.49 million in gross value
- Illinois: Estates over $4 million in gross value
- Maine: Estates over $5.8 million in gross value
- Maryland: Estates over $5 million in gross value
- Massachusetts: Estates over $1 million in gross value
- Minnesota: Estates over $3 million in gross value
- New York: Estates over $5.85 million in gross value
- Oregon: Estates over $1 million in gross value
- Rhode Island: Estates over $1.58 million in gross value
- Vermont: Estates over $4.25 million in gross value
- Washington: Estates over $2.19 million in gross value
- Washington D.C.: Estates over $5.68 million in gross value
If you live in one of these states and have an estate that meets the relevant requirement, you may be able to claim state tax deductions for certain funeral-related expenses.
What funeral expenses are considered tax-deductible?
Some of the costs that qualify as tax-deductible expenses for the relevant estates include:
- Funeral home director and facility expenses
- Funeral service arrangement expenses (such as catering, flower arrangements, etc.)
- Transportation costs
- Religious leader costs
- Burial plot and interment costs
- Headstone or grave marker costs
- Casket or urn costs
These expenses can be deducted as long as they were paid for from the estate funds.
It’s a good idea to speak with a tax professional before attempting to deduct these taxes or consider them write-offs. You’ll also need to make sure you’re keeping track of these expenses and maintaining receipts and records that these items were paid for using the estates funds.
How do I claim tax deductions for these funeral expenses?
You should consult a tax authority before filing taxes for the estate and before claiming tax deductions for an estate. To claim tax deductions for funeral expenses from the estate, you’ll need to complete Schedule J on IRS Form 706, which you can find information on here.
Are funeral expenses deductible on Form 1041?
No, you are not able to claim deductions for funeral expenses on Form 1041.
Are you in charge of funeral expenses or planning a funeral? If you haven’t started a memorial website for your loved one, now is the perfect time to get going. A memorial website is an easy way to connect your loved one’s community over the loss of someone special by inviting them to share memories, read the obituary, send donations, support each other and much, much more.