Are funeral and cremation expenses tax deductible?
At National Cremation, our funeral directors are frequently asked whether or not funeral expenses are a tax deductible expense. Although we advise you to consult a tax specialist who can answer this question more fully according to the specifics of your case, there are some general rules to consider when answering this question.
According to the IRS, funeral expenses including cremation may be tax deductible if they are covered by the deceased person’s estate. These expenses may include the Basic Service Fee of the funeral director, cremation fees, and placement of the cremains in a cremation urn. Qualified funeral expenses also include the costs associated with holding the memorial service and the family reception, such as hiring a minister to deliver the eulogy, arranging transportation to the gravesite for the immediate family, florist fees, and even the cost of catered food at the reception.
Funeral expenses that are NOT tax deductible are any which are not paid by the deceased person’s estate. In other words, if you die and your heirs pay for the funeral themselves, they will not be able to claim any deductions for those expenses on their taxes. This cost is only tax deductible when paid for by an estate.
This underscores the importance of estate planning and funeral preplanning before you have a need. Although the cost of a pre-planned funeral cannot be deducted from your own taxes while you are still alive, pre-planning saves your heirs and loved ones from being forced to pay the cost of the funeral without any tax relief at a price higher than what a preplanned cremation and memorial would cost. It also saves your loved ones valuable time and eases the grieving process, as paying for a cremation and funeral using estate funds can often delay proceedings and add unnecessary stress while waiting for funds to be released.
According to Abby Schilling, Service Manager at National Cremation’s Richfield, Minnesota office, “Most people who prearrange their cremation do so to simplify things for their loved ones, but what many people do not realize is it can also be a sound financial strategy. When we do preplanned cremation and memorial, you lock in the services you want at today’s cost. I’ve serviced many prearrangements that were originally made in the 1990s and I’m always amazed at how much money these families saved their loved ones by giving the gift of prearranging.”
An additional benefit is that since the funds for the preplanned cremation and memorial are placed into an escrowed account, creditors cannot tap into it, and you cannot be required to spend it on health care or nursing home services if you become disabled.
For more information on the benefits of preplanning, please contact us by filling out the form on this page.
Additional Helpful Links: