If you paid some or all of the costs associated with holding a funeral in the last year, you’re probably wondering if the funeral expenses qualify as a tax deduction on your federal income tax return. Although inflation hasn’t quite struck the funeral industry as hard as it has hit others, funeral services are still expensive.
The IRS has set strict guidelines that dictate who can deduct funeral expenses on taxes, but it isn’t impossible to do. Here’s who can and can't claim funeral expenses as a deduction on taxes and the steps you’ll need to take to claim them if you qualify.
Who can deduct funeral expenses on taxes?
As an individual taxpayer, you aren't entitled to deduct funeral expenses on your tax return. This means you can't claim the cost of the service, burial, or any other expenses you incurred on taxes. As unsettling as this sounds, other parties may still qualify for the deduction.
If you were appointed as the executor of an estate and used estate funds to cover funeral costs, you may then be able to claim them as deductions, according to TurboTax. It's worth pointing out that as an executor, if you paid for certain expenses out of your own pocket, you cannot claim them as deductions.
But, if you used the estate's funds to cove these costs, when it comes time to settle its taxes or satisfy outstanding tax liabilities, you can then deduct funeral expenses. In turn, this will help lower the taxable income.
Another stipulation that we must note is the federal estate tax exemption limit. When an estate is below the $12.92 million (in 2023) federal tax exemption limit, it won’t be able to deduct funeral expenses. But, if the estate is above this limit, then it likely can deduct funeral expenses on taxes.
Because most estates don't reach this limit, many are unable to claim funeral expenses as a tax write-off.
How do you deduct funeral expenses on an estate’s tax return?
If you’ve been tasked with administering an estate and it’s eligible to deduct funeral expenses on taxes, you’ll need to file Form 706, United States Estate Tax Return along with Schedule J. On the form, be sure to itemize the funeral expenses and include the total amount spent.
What types of funeral expenses are tax-deductible?
According to the Lincoln Heritage Life Insurance Company, the following funeral expenses can generally be deducted on taxes (given the estate is eligible):
- Casket or urn costs
- Funeral home fees, including direction and facility costs
- Green burials
- The costs associated with hiring a minister, rabbi, or another type of religious leader
- Burial plot
- Tombstone, gravestone, or another type of grave marker
- Floral and catering services (for the funeral)
- Transportation for the deceased
However, you can't claim the following as funeral deductions:
- Travel costs for friends and relatives of the deceased
- Fees paid by government programs
- Costs paid by a life insurance policy
If you have questions regarding deducting funeral expenses on taxes or aren’t sure how to claim them, you can always let a tax preparer assist you with filing to ensure you don't make any costly errors.