Can I deduct funeral expenses for my mother on my tax return? –

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What About the Decedents Wishes?

Common law has historically taken the position that a decedent’s remains are not “owned” by the estate. Rather, “ownership” of the body belongs to the next of kin. 

Extravagant burial directions are generally not honored as a matter of public policy, because such practices could well result in grave robbing. The movie star who wants to be buried in her Ferrari is a good example. Directions for internment in a solid silver or solid gold casket are in the same category.

A decedent’s wishes expressed in the will are not necessarily binding, either, although they’re given a lot of weight, particularly with regard to disposition of the body. In the event of dispute, the general order of preference recognized in case law is usually:

  1. The wishes of the surviving spouse if the marriage existed at the time of death
  2. The wishes of the decedent, especially if they were strongly and recently expressed
  3. The wishes of the next of kin according to their relationship or association with the decedent

The court has exclusive jurisdiction of the control of the decedent’s burial in the event that a dispute arises that cannot otherwise be resolved.

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Funeral Expenses Tax Deductible for Estates Only

According to Internal Revenue Service guidelines, funeral expenses are not deductible on any individual tax return, including the decedent’s final return. Though some taxpayers may assume they could include these expenses as a medical deduction on the decedent’s final income tax return, the IRS allows taxpayers to deduct only those medical expenses that they paid in order to prevent or treat an illness, and funeral expenses don’t meet these requirements.

If the IRS requires the decedent’s estate to file an estate tax return, the estate’s representative may be able to include funeral expenses as a deduction. As of the 2017 tax year, only estates with gross values of $5,490,000 or more must file a federal estate tax return, and that cutoff doubles to $11,180,000 as of the 2018 tax year. The estate’s gross value is the total value of all assets it contains. If an estate must file a tax return, the return is due nine months from the decedent’s date of death.

If the IRS requires you to file an estate tax return, list deductible funeral expenses on Form 706. Deduct funeral expenses by completing Schedule J and attaching it to Form 706. Include an itemized list of funeral expenses in section A of Schedule J, and enter the total of all funeral expenses at the bottom of the section. Don’t include any funeral expenses for which the estate received reimbursement from any source. As with any expenses you’d claim on a tax return, keep receipts or other documentation of what the estate paid for the funeral when claiming funeral expenses from estate taxes.

How to Claim Tax Deductions for Funeral Expenses

Executors can claim tax deductions by completing Schedule J on IRS Form 706. Always consult a tax professional before completing any IRS forms. Use these steps to claim write-offs for funeral expenses:

  • Go to Schedule J on page 17.
  • Enter your itemized funeral costs on line 1 of Section A. These are the costs discussed in the “Which Funeral Expenses Are Tax Deductible?” section of this guide.
  • Write the total on the “total funeral expenses” line.

You’ll need to add this number to fees that aren’t related to the funeral. Use these steps to get your final tax deduction amount:

  • Add your administration expenses for settling the estate to lines 1 – 3 of Section B on page 17. These are the costs of executor, attorney, and accountant fees.
  • Itemize your miscellaneous expenses on line 4. These are other costs paid to settle the estate.
  • Add these total costs to the value of “total funeral expenses.” Write the amount at the bottom of the Schedule J page and on line 14 of page 3.

Estates that earned income are sometimes also required to file income tax forms using IRS Form 1041. However, these forms aren’t used to claim funeral-related tax deductions.

Which Estates Can Claim State Tax Deductions for Funeral Costs?

Some states require estates to pay taxes even if they don’t file federal returns. Each one has a different value for which estates need to file a return, but none is as high as the federal amount.

Funeral Costs

When it comes to funeral costs themselves, including burial and other important areas, the determining factor in whether tax deductions are available is the source of payment for these costs. If they’re paid for by friends, family, or even the departed individual’s account, they will not be deductible – no individual deductions are possible here.

However, if the estate of your loved one is used to pay for these costs, deductions are possible. It’s important to note that not all estates are large enough for taxation, but if it is, funeral and burial costs can be claimed from the estate. Do note, though, that if funeral costs are covered in part or whole by Veteran’s Affairs or Social Security, these contributions cannot be deducted later on.

End of Life Estate Planning

Most people don’t have to worry about the estate tax since most estates simply don’t qualify. In fact, according to the Center on Budget and Policy Priorities, only 2 out of every 1,000 estates in America had to pay the estate tax in 2017.

The best way to prevent your family from struggling with the burden of end of life expenses is to plan ahead. Looking into low-cost funeral options and how to budget for funeral costs has never been more critical.

The cost of a natural burial, for example, is significantly less than a traditional burial. More people are considering a natural burial for cost and environmental reasons. Ultimately, these are the questions worth asking now. 

When can you deduct funeral expenses?

It is important to note that the deduction process is very complicated and contains many exceptions. If you want to deduct funeral costs from your taxes, be sure to find out how much income you must-have for those expenses to become tax-deductible. Only then can you decide whether or not this expense will be a good addition to your tax return.Tax laws are complicated and they change frequently. If you plan on taking a deduction for funeral expenses, be sure to consul twith an expert who can make this process as painless as possible.

Conclusion

There are many rules for this type of deduction. If you want to ask about specific information, check with your local IRS office or an accountant specializing in tax law. An accountant will be able to answer your questions quickly and more precisely than the personnel at the IRS Office, who can only provide general information. Nevertheless, whatever the amount may be that you end up deducting from your taxes, know that it will only apply to future years. You cannot get a refund for expenses already incurred in previous years. This is why people usually prefer to have an accountant look over their deductions before filing returns at the end of each calendar year.

Being able to deduct funeral expenses is something that everyone should consider when planning an estate plan. Like other deductions, there are specific rules regarding what can or cannot be deducted. Hence, you must keep organized records if you want to take advantage of this deduction strategy. From learning about several different strategies for claiming these expenses, you`ve probably gleaned some valuable information about how you can go about complying with the IRS`s rules for claiming these expenses.

If you haven`t already put a plan in place to ensure that your wishes are carried out when it comes to settling your estate, the time has come to take action. Failure to do so could result in many problems down the road. For example, if you fail to execute a will or trust at some point, then there is a good chance that any remaining assets would end up going straight into probate court and subsequently be distributed equally among your heirs at law (children). Although this isn`t necessarily a bad thing, it certainly isn’t what you planned to do with those assets once you passed away. This is where having an attorney help create your proper documents can help immensely.

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Who is responsible for funeral expenses?

The executor of the decedent's estate is responsible for using estate funds to cover funeral expenses. If the estate does not have adequate funds, then the executor will identify the next-of-kin who is responsible for covering the remaining costs. If there is no family, no funds in the estate, and no one else willing to cover expenses, then the state or the local government will cover burial or cremation costs.

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