Are Burial Expenses Tax Deductible? Find Out Now

In case of the death of their loved one, families hold a funeral to pay last respect and remember the deceased soul. These types of events are good ways to gather friends and family to say goodbye and honor the deceased. However, funerals can be costly. People often ask are burial expenses tax-deductible. Well, the answer to this question depends on which type of insurance you have and who is paying. This is how it works. In this blog, you will learn about burial insurance tax deductibles.

Understanding Burial Expenses

Burial expenses or funeral costs may vary depending on different factors: individual service, location, and preferences of merchandise with merchandise selections like urns, caskets, vaults, etc. Some basic necessary service expenses you need to pay for any funeral arrangement. Here are those basic services:

Family Consultation

For the selection of services guidance, information, and support are provided by a licensed staff member.

All Time Availability

An experienced team is present to assist in case of concerns or any needs.

Shelter and Care

Respectful handling of the deceased according to their and their family’s wishes.

Documentation Handling

Preparation of mandatory paperwork for certificates and permits.

Coordination

Coordination with others for various services like cemeteries, including clergy, florists, and musicians.

Support Services

Assistance to do administrative work and beyond.

Optional Professional Services

Apart from basic services, funeral homes offer a range of optional services according to the requirements and preferences of each family.

Home Setup

Arranging and delivering the necessary things for home-based services.

Anatomical Donation

Minimal professional assistance for individuals who opt for anatomical donation arrangements.

Settlement Assistance

Assistance in understanding the complexities of insurance and benefit claims.

Specialized Care

Specialized care and services for organ donors, and other special scenarios.

Other Services

Apart from the basic and optional services, other considerations may impact the cost of arrangements for a funeral:

Pallbearers Charges

Charges or fees for members of the staff who act as pallbearers.

Special Handling Charges

Additional fees for other requests like weekend or evening services for which additional staff members are needed.

Additional Mileage Charges

Charges for the services provided outside a specified area.

Vital Statistics Courier Service

Help to obtain and deliver mandatory documents.

Average Burial Expenses

Funeral costs or burial expenses vary based on location and the burial service details. The funeral’s average cost with a viewing and burial is about $7,848 according to the National Funeral Directors Association. the average becomes less i.e., about $ 6,971 for the families who select cremation. Funerals may be a lot of expense for a few families. The Department of Veterans Affairs and Social Security help to cover the costs based on military service.

Preparation for Funeral Expenses

The funeral expenses are deductible or not, they are very costly. There are many things you can do to ease the payment burden of the funeral and burial costs. Among these ideas few are the following:

Burial Insurance

It is also called final expense insurance. Burial insurance aids in covering the expenses of the death of a person, especially arrangements of funeral, costs of burial, medical bills, or remaining debts, by paying monthly premiums that the beneficiary can claim after the death of a person.

Funeral Funds

If someone does not want burial insurance or even to directly in advance to a funeral home that person can get a separate funeral expense. This can be claimed by their loved ones at the time of their death. A person may commit to depositing an amount every payday or set an auto-debit from a bank savings account.

Prepaid Funeral Plans

Prepayment can be directly made. It can also be made as an advance payment or can be given to a funeral home for funeral plans. It can be paid in full or in installments each month.

Burial Expenses Tax Deductibility

The deduction of funeral costs on tax returns depends on who paid for the funeral or burial costs. But unfortunately, an individual taxpayer’s funeral expenses are not tax-deductible, which means that you cannot deduct the expenses of the funeral from individual tax returns.

If the estate paid the expenses, then the eligible estates may claim a deduction. But you cannot use the deduction if your estate is less than the $12,060,000 federal estate tax exemption limit.

Estates That Deduct Funeral Expenses

You cannot claim funeral costs on taxes unless the costs are covered by the assets of the estate and the estate’s worth exceeds the limit of $12.92 million. Above this threshold, an estate must pay federal estate taxes and must submit an estate income tax return. If you reimburse the estate for funeral costs, tax-deductible amounts become less as the reimbursement is taken from your overall deduction. For instance, if the estate was covered for interment costs, and was paid back, those expenses cannot be claimed as a tax deduction.

Tax-Deductible Funeral Expenses

Here are some common tax breaks provided to eligible estates related to funeral expenses.

Urn or Casket

In the USA the average cost of a casket is between $2,000 and $5,000. The average cost of an urn ranges from $70 to $2,250. The price of green burial containers is $50 to $350. If the costs are necessary and reasonable then the prices may be tax deductible. These are paid by the estate of the deceased person.

Cremation

If cremation costs are covered by the estate of a deceased person, they may be used as tax deductions. It includes all cremation costs, whose average is about $4,000 and $7,000. Furthermore, costs are covered for the preparation of the body, transfer of remains transfer, and use of different facilities, along with the process of cremation. It also includes funeral and memorial services.

Interment

The average cost of interments in the US is approximately $7,848. But charges can fluctuate depending on the location or place. In some places, the charges can be as high as $12,000. They are tax deductible only when the deceased person’s estate pays for its expenses. If the gross estate exceeds $12,920,000 with no costs reimbursed, then funeral costs including interment and the burial plot can be claimed on the tax return of federal estate.

Funeral Home Facility Expenses

The average cost can be from $6,971 to $7,848 when the funeral is held at home. Funeral expenses for most individual taxpayers cannot be deducted. Funeral expenses can be used as a tax break if the state is eligible, and the costs are covered by the estate.

Gravestone or Tombstone

The cost of the gravestone or tombstone depends on the materials and the decoration level of the stone. Normal flat grave markers can cost approximately $800 to $6,000. While the cost of pillow headstones can vary from $2,000 to $10,000, and the price of upright headstones can be approximately $1,600 to $25,000. For eligible estates, these costs of stones can be tax deductible if they are mandatory and reasonable by the IRS.

Funeral Home Director Fees

Making the funeral arrangements can be hard for the family who suffered the loss. For this purpose, to make different arrangements teams are hired who look after things such as religious services, burial or cremation type, catering, florist costs, and many more. The expenses can be tax deductible for the funeral of the dead person if the expenses come from the funds of the estate. The estate must stand eligible for this.

Green Burial Services

Green burial is eco-friendly and involves burying a body in a natural or biodegradable casket or container or a biodegradable shroud often built from natural fiber or sustainable wood. These burial expenses are less than a traditional service of the burial. You cannot deduct funeral expenses from green burial services. You can do it in special cases in which the funeral expenses of your mother were paid by her estate.

Costs of Transportation

It can cost up to $350 to transport the body of a dead person. When the state stands eligible by the IRS these expenses and costs incurred by family members during traveling to and from the location of the funeral, can be deducted. Expenses of funeral guests’ transportation are not deducted.

Non-Deductible Costs

In some cases, the estate’s funding may pay for the expense of the funeral. Not all the expenses of a funeral are deductible even if you pay taxes. Here are a few expenses that are not deductible from federal tax returns.

Travel Expenses of Funeral Guests

Insurance does not cover funeral guests’ travel expenses. They must pay their own lodging and travel costs if they attend the services. These expenses do not stand eligible to be used as a tax break.

Coverage by a Life Insurance Policy

Expenses are considered non-deductible if any insurance policy such as a burial insurance policy, life insurance policy, or a final expense policy pays for funeral costs.

Costs Paid by Government Programs

Any funeral costs covered by government programs are not allowed on the tax deduction list. This is not limited to Veterans Affairs payments, Social Security payments, and final expense insurance payment policies.

How Can You Claim Funeral Expenses on Taxes?

If you want to claim funeral expenses paid by your estate.

You may complete Schedule J of Form 706. Must ensure to list all the expenses to clearly show the payment of each expenditure.
On average funerals and burials can cost thousands of dollars. Ensure to list out all expenses, cremation, and burial services the casket material costs, headstones, urns, and even catering services charges, transportation costs of body, flowers, fee of religious leader, and funeral director fees.
Keep track of these expenses and keep the record in the form of receipts. This is necessary as you need the exact payment spent on every item.
If insurance reimburses the cost by Social Security payments, or by VA payments. then it will be subtracted from tax deductions.

Alternative Ways to Pay for Funeral Expenses

Here are some alternative ways people can pay for funeral expenses.

Getting Help from the Government to Pay for Funeral Expenses

If someone cannot afford funeral expenses, two government grants may aid to pay for funeral expenses.

The payment of funeral expenses (for individuals on qualifying benefits).
The bereavement support payment (for bereaved spouses).

Paying For Funeral Costs from The Estate

The family of the deceased person can pay for the funeral costs out of the estate. But it does not lower the cost of funeral services. It only helps to reduce the financial burden. It is not subject to inheritance tax. Once the family gets the death certificate and invoice for the expenses of the funeral banks will release funds. However, the release of immediate funds is not guaranteed. Unfortunately, it is not approved directly, and the bank may ask for a grant of representation. Getting this payment can take several days to months, making the path of getting funds more complex.

Get Charitable Aid to Pay for Funeral Costs

A lot of charities help to pay the costs. If you need support, you may ask for the coverage of expenses.

Crowdfunding the funeral Expenses

Upon the death of a person family and friends can together make the arrangements and pay for the things. You may have seen it in families and friends. This includes contributing to the expenses of the family member to aid in covering the funeral expenses.

A Public Health Burial

Another thing known as a pauper’s funeral is an option. But they are not common. They are generally available if the deceased person has no family or close relatives. Local councils arrange and pay for these types of funerals.

You must get burial insurance or final expense insurance if you want to be worry-free about the financial expenses at the time of grief. It helps you pay for the funeral expenses.