Funerals are a time to commemorate loved ones who have passed and for families to express their sorrow. Funerals are an essential part of grieving after losing someone, as they bring together friends and family.
Unfortunately, however, they are often very expensive.
The National Funeral Directors Association conducted research in 2021 that found the median cost of an adult funeral with viewing and burial to be $7,848. That figure represents a 6.6 percent increase from the cost in 2016.
So, is there any way to save money on funeral expenses? What about the taxes you pay on them? Are funeral expenses tax deductible?
Given that many see these expenses as necessary, it should be no surprise that many wonder if these costs can be deducted from their taxes. So let’s dive in and see if the IRS allows this.
Are Funeral Expenses Tax-Deductible?
No, you cannot deduct funeral expenses from your tax liabilities. If you have paid for funeral expenses during the tax year, you cannot deduct it from your tax liability.
Personal funeral costs are not tax-deductible. Because of this, you will not be able to claim a deduction on your individual tax return for the money spent on a funeral.
Individuals are not permitted to deduct funeral costs. However, certain estates may be able to claim a deduction for these expenses if the estate paid for them.
This deduction is unavailable to you if the value of your estate is less than the threshold for the federal estate tax exemption, which is set at $12,060,000 for the tax year 2022.
However, suppose your estate is worth more than the federal estate tax exemption limit of $12,060,000. In that case, you will need to claim eligible deductions to lower your overall tax liability.
Every dollar you can remove from your taxable income results in significant savings when you consider the forty percent estate tax. To deduct costs associated with the funeral on the tax return for the estate, you will need to fill out Schedule J of Form 706.
Which Costs Can You Deduct From Estate Taxes?
Be aware that only some of the costs associated with a funeral can be deducted from the taxes owed by your estate if you are eligible to deduct funeral expenses from those taxes. The fees for things such as embalming, cremation, casket, hearse, limousines, and floral arrangements can be deducted from your taxes.
The cost of transporting the body for a funeral and the cost of transporting the person accompanying the body are considered expenses associated with the funeral. The costs of buying and installing a monument, gravestone, or marker on the decedent’s burial lot or final resting place are also tax-deductible. You can deduct these expenses from the estate tax. The cost of a funeral meal is typically not expected to be reimbursed.
The costs that family members incur to travel in order to be present at the funeral cannot be deducted. These costs are regarded as being of a personal nature on the part of the family members and attendees. Therefore, travel costs do not qualify as a deductible expense on individual tax returns.
So, to summarize, funeral expenses are not usually tax-deductible. However, if the costs are paid from an estate and meet the federal estate tax exemption limit of $12,060,000, some of the expenses can be deducted.