Are Cremation Costs Tax Deductible?

When a loved one passes away, the process of planning a funeral or cremation takes place. However, these services can be costly, and many people wonder if funeral wakes and cremation expenses are tax-deductible. The answer depends on who pays and what type of estate is left behind.

Non-deductible Funeral and Cremation Costs

The Internal Revenue Service (IRS) sets very strict rules regarding what expenses can and cannot be deducted from a tax bill:

Funeral and cremation expenses cannot be deducted by an individual taxpayer on their tax return and are only tax deductible if they are paid for by the estate of the deceased person. The IRS allows deductions for medical expenses, but funeral costs are not included in this.

While individuals cannot deduct these expenses, an eligible estate may be able to claim a deduction if they pay for the funeral or cremation. However, the funeral and cremation expenses cannot be deducted if the estate is below the $12,060,00 federal estate tax exemption limit.

How to Claim Tax Deductions for Cremation & Funeral Expenses

The primary rule for claiming funeral and cremation expenses as a tax deduction is that the costs must be paid out of the decedent’s estate. They are never deductible if paid by an individual taxpayer. The estate also needs to be large enough to qualify for the claim.

If the estate qualifies for the tax deduction to claim the expenses for funerals and cremations, they need to be listed individually on Schedule J of Form 706. If any of the deceased’s insurance policies reimburse the estate for any of these costs, they must be deducted from the total expense you claim. The completed Schedule J and Form 706 United States Estate Tax Return need to be submitted when you file the estate return with the IRS.

Claiming funeral and cremation expenses can be complex and overwhelming, so it is best to consult a qualified tax attorney for help. Additionally, take a look at the least expensive ways to be cremated before making a final decision.