While it’s not the first thing anyone wants to think about while grieving the loss of a loved one, an important area for consideration is the costs and financial impact associated with paying for funeral and burial costs. There are several vital elements of this to think about, including whether the estate will be relied upon to pay some portion of the required funds.
At Lindquist Mortuaries, we offer a wide range of funeral arrangements and burial or cremation options, and are happy to assist you with fitting these into your budget. We’ll help identify any important financial themes you might otherwise miss during your period of grief. One such potential theme: Whether the funeral expenses you’re undertaking are or aren’t tax-deductible. Here are some basic areas to look at in this realm, plus some simple directions on how to claim such tax deductions if they’re available.
It’s important to differentiate between these areas, because whether they’re tax deductible often varies. In the majority of cases, medical bills that have been itemized from an expense standpoint – a simple enough task for any individual or particularly any accountant – will be tax-deductible.
However, most burial expenses and related costs are not considered deductible. Per the IRS, funeral and burial costs are not eligible for these kinds of deductions except for in certain specific exception cases, which we’ll go over below. Only medical expenses are tax-deductible for individuals.
Now, it’s important to differentiate between individuals who may contribute to funeral costs – including family, friends and even the deceased individual’s bank account – and the estate itself. If the estate is large enough, to the point where it qualifies to be taxed, you can use funds from the estate (or claim the usage of such funds) and receive a tax deduction on the estate.
However, not all estates are large enough to be taxed at all. In addition, if a government group like the VA or Social Security helps offset some funeral costs, these cannot be claimed for deductions in any format.
If your estate is large enough to be taxed, and therefore to claim deductions on funeral costs, it’s generally best to involve a tax prep professional or a licensed accountant for both areas. If you choose to perform these tasks yourself, you will need to use Form 706 on US Tax Returns, specifically Schedule J to itemize funeral and burial expenses on the decedent’s behalf. All responses will be written in Section A, Line 1 on this form and schedule. In cases where family or friends helped offset the costs, you don’t necessarily have to claim this.