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Tuesday, May 1, 2012
Are Funeral Expenses Tax Deductible?
If you have paid for a loved one’s burial you may need to know, ‘Are funeral expenses tax deductible?’ These costs can be deducted from your tax liability but you must know the appropriate way to file for this deduction. There appears to be a lot of misunderstanding about where the funeral deductions should be placed on the Internal Revenue Service (IRS) forms. You must file the deduction legitimately in order to receive the credit. It is important to keep all the receipts associated with the final expense payments when you plan on taking the IRS deduction. Let’s look at some of the incorrect places this deduction is listed, then we will discuss the right way to file.
The appropriate place to put funeral expenses is with the estate tax deduction. The IRS states that an estate will owe taxes to the federal government if the assets value is greater than $3.5 million. Allowable deductions can be taken from the estate total before calculating the value limit of the IRS code. These figures can change often, so you should check with an estate planner or income tax preparer to determine your specific liability. When leaving the entire estate to a spouse the IRS will not require tax payment on the assets. When the estate is left to children, then the IRS requires a tax payment.
Some of the allowable deductions subtracted from the value of the estate are those for funeral costs. The cost of a funeral is between $3,000 and $10,000 for the average person. The costs can escalate several times higher when paying for specialized funeral services. All these expenses can be deducted from the total value of the estate and the asset values will be lowered.