Are Funeral Expenses Tax Deductible?
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Burial or funeral insurance is tax-deductible or not is a commonly asked question. The answer may disappoint you; most of the individuals can’t claim burial expenses as tax-deductible.
However, if the expenses are paid from an individual’s estate that it will be tax-deductible.
According to IRS, an individual taxpayer may deduct medical expenses on the tax return but can’t deduct funeral costs.
Funeral Expenses and Estate Settling
At the time of estate settling, you can claim a tax deduction for the funeral expenses; if you are planning to pay the expenses from the estate otherwise you can’t claim any deduction.
However, most of the estates are smaller than the funeral expenses and it is quite difficult to claim a deduction if it can’t cover the amount.
Mentioning the Cost in Form 706
It’s quite easy to report the funeral expense in form 706. You have to complete the Schedule J, Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims and attach it with the form.
However, you also need to put the expenses on Line 1 on the Schedule section and put the total cost under Total Funeral Expenses.
Which Item is Tax-Deductible
If an individual keeps money aside only for covering the funeral expenses from the estate only then it will be tax-deductible.
IRS allows the following items to be tax-deductible:
- Foods of Funeral Ceremony
- Service Fees
How Much the Funeral Does Actually Costs?
The funeral cost is increasing every year. The funeral cost was not a headache before but the days have changed and now it is quite costly. In 2017, the cost is around $9,000. For more details, read this post.
You may have to pay some money for funeral taxes but you should never hide it. You should follow the rules and regulations of IRS and provide the right amount in your tax return.
Last, of all, it is possible to get burial insurance after 90 years, so, you can arrange the expenses with an insurance policy.