Are Funeral Expenses Tax Deductible?

Funeral expenses are not deductible on an individual’s income tax return. However, these costs can be deductible under specific circumstances on a federal estate tax return. This deduction applies only to a deceased person’s estate, not to the individuals who paid for the services.

Eligibility for the Estate Tax Deduction

The federal estate tax applies to the transfer of property at an individual’s death and only affects very large estates. It is levied on the value of the deceased person’s gross estate that exceeds a specific exemption limit. For deaths occurring in 2025, the federal estate tax exemption amount is $13.61 million per individual.

Most estates do not owe federal estate tax due to this high exemption threshold. Consequently, most estates are not required to file IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. This form is only necessary if an estate’s gross value, combined with certain lifetime taxable gifts, exceeds the exemption amount.

The estate’s executor or administrator is responsible for preparing and filing Form 706 if the estate meets the filing threshold. For most families, funeral expenses will not result in any tax savings.

Some states may impose their own estate or inheritance taxes. These state-level taxes operate independently of the federal system and have varying exemption amounts and rules. Any deductions for funeral expenses under state laws depend on the specific regulations of that state.

Qualifying Funeral Expenses

If an estate is subject to federal estate tax, specific funeral expenses can be deducted. These costs must be reasonable and paid from the deceased’s assets or by the estate. The IRS allows deductions for expenses incurred for burial or cremation.

Allowable expenses include:
Embalming, cremation, and burial or interment of remains.
Services provided by a funeral home, such as preparation of the body and use of facilities.
The cost of a casket or urn.
The purchase of a cemetery plot or mausoleum.
A grave marker or headstone.
Transportation costs for the body to the place of burial or cremation.
Fees paid to clergy or officiants for conducting the funeral service.
Reasonable expenses for a wake or a funeral service, including the use of a facility and necessary incidentals.

These expenses must be directly related to the funeral and not for a separate social gathering.

Non-Qualifying Funeral Expenses

Several common expenses associated with a death are not deductible for federal estate tax purposes. These items are considered personal expenses of the family or administrative costs of the estate, rather than direct funeral expenses.

Non-deductible expenses include:
Travel expenses for family members to attend the funeral, such as airfare or mileage.
Lodging costs for attendees.
Lost wages for individuals taking time off work to attend the funeral.
The cost of flowers beyond what is an integral part of the funeral service arrangement, such as large floral displays or individual wreaths.
Expenses for a reception or gathering held after the funeral, beyond a reasonable part of the service itself.
Mourning attire, such as special clothing purchased by family members.
Expenses associated with probate or general estate administration, such as attorney fees or court costs. While these may be deductible elsewhere on Form 706, they cannot be claimed as funeral expenses.

How to Claim the Deduction

Claiming the funeral expense deduction requires filing IRS Form 706 if the estate meets the federal estate tax filing threshold. The specific section for funeral expenses is Schedule J, titled “Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims.” This schedule is used to itemize and report all deductible funeral costs.

To complete Schedule J, the executor must gather specific documentation, including itemized receipts from the funeral home, cemetery, and other service providers. These receipts should clearly detail each expense, the service provided, and the amount paid.

IRS Form 706 and its associated schedules, including Schedule J, are available on the IRS website or through tax preparation software designed for estate tax returns. The executor will list each qualifying funeral expense individually on Schedule J, providing a brief description and the corresponding amount. The total of these expenses is then carried to the appropriate line on the main Form 706.

Once Form 706 and all necessary schedules are completed, the return must be submitted to the IRS. This can typically be done via mail, with electronic filing options also available through authorized tax professionals. Processing times for the return can vary.

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Citations:

https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
https://www.irs.gov/forms-pubs/about-form-706