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.

Filing Tax Returns for a Deceased Person

In the United States, the Internal Revenue Service (IRS) requires both an individual tax return and an estate tax return for persons who died within that calendar year.

The date of a person’s death determines when his individual tax liability becomes the liability of his estate. Until his estate is settled in the probate courts (if necessary) or otherwise distributed, all income generated must be reported to the IRS.

A legal representative such as an executor or administrator is responsible for filing all the required tax returns. A surviving spouse can file a joint return for the year of death if no executor or administrator has been appointed, and if the deceased had not already filed a separate return. A surviving spouse cannot file a joint return if he has remarried before the end of that calendar year or was a nonresident alien at any time during the tax year.

An administrator or executor can revoke a joint return by filing a separate return for the deceased. If a joint return is filed by a surviving spouse and the estate cannot pay its share of the tax liability, the full amount must be paid by the spouse. Surviving spouses who are also executors must sign the return twice, once as executor and once as surviving spouse.

Talking To A Child About Death

If you are concerned about discussing death with your children, you’re not alone. Many of us hesitate to talk about death, particularly with youngsters. But death is an inescapable fact of life. We must deal with it and so must our children; if we are to help them, we must let them know it’s okay to talk about it.

By talking to our children about death, we may discover what they know and do not know - if they have misconceptions, fears, or worries. We can then help them by providing needed information, comfort, and understanding. Talk does not solve all problems, but without talk we are even more limited in our ability to help.

What we say about death to our children, or when we say it, will depend on their ages and experiences. It will also depend on our own experiences, beliefs, feelings, and the situations we find ourselves in, for each situation we face is somewhat different. Some discussions about death may be stimulated by a news report or a television program and take place in a relatively unemotional atmosphere; other talks may result from a family crisis and be charged with emotions.

Long before we realize it, children become aware of death. They see dead birds, insects, and animals lying by the road. They may see death at least once a day on television. They hear about it in fairy tales and act it out in their play. Death is a part of life, and children, at some level, are aware of it.

Religion is a prime source of strength and sustenance to many people when they are dealing with death. But if religion has not played an important role in a family’s life before death, a child may be confused or frightened by the sudden introduction of religious explanations or references. Children tend to hear words literally, and religious explanations that may comfort an adult may unsettle a child. For example, the explanation, “Baby brother is with God now,” or “It is God’s will,” could be frightening rather than reassuring to the young child who may worry that God might decide to come and get her just as He did baby brother.

Should A Child Attend A Funeral?

Decisions like these have to do with both what is practiced in your family's culture and also your particular child's level of development and temperament. There is no "one right answer." It is important, in considering what to do, to take into account a five year old's capacity to understand death. Here are some things to consider:.

A five-year-old child can't fully comprehend death. She may be able to understand that the person isn't going to be here any more, but she will probably have a much harder time imaging why that might be the case. A common explanation young children come up with is that the dead person does exist somewhere else, like in heaven, in the cemetery, or somewhere far away you could reach by airplane.

What impacts young children most pay when someone dies is the behavior and feelings of the people around them. It is from these responses that children come to understand that death is very important, sad and significantly different from most other events in life. Knowing that children are learning from us during this process can be a motivating force for us to get the support necessary to go through the grief process in healthy ways.

It may be helpful for children to see adults cry. It can be overwhelming for children, however, if adults do all of their grieving in front of their children. It is useful for adults to regularly take private time, time to deal with their own grief. This will enable them to be supportive of their children's feelings during the process.

Saving Heartache and Headache

Choosing a funeral home is a decision that many families face at some point for their own pre-arrangements or on behalf of deceased family members.  It can be a very emotional process because choosing a funeral home often provides the final closure for those left behind. When loved ones are in a state of shock and grieving, the task can become even more challenging.

To save heartache and headache, and to make more financially sound vs. emotionally driven decisions, it is smart to learn about processes and options before you or your family actually needs to research and choose a funeral home. Armed with the right knowledge, the experience can be actually a positive one.

The funeral home industry is highly regulated by federal, state, and local laws in order to keep consumers safe. Overall, consumers are protected by The Funeral Rule -- which is enforced by the FTC. It requires, among other things, that providers clearly itemize prices. They must also furnish written price lists to customers inquiring about services in person or over the phone.

Many providers offer package deals, but it is important to note that you have the right to buy individual services. When choosing a provider, request an itemized list and choose the individual services that you need.

Choosing a Funeral Home

A funeral director will be closely involved with helping your family through very difficult times. Therefore, the selection of a funeral home and funeral director is an important task.

It is important that you feel comfortable with and trust the funeral home and funeral director you choose. Your funeral director will help you understand the questions you should ask, the options you have, and allow you to make the best choices for you and your family.  Most people choose a funeral director for one or more of the following reasons:

1. Reputation
2. Previous experience with a funeral home or funeral director 
3. Recommendations from others you trust
4. Knowledge of the funeral home and its ownership
5. Appearance and location of the funeral home
6. Options available
7. Cost

What To Do When A Death Occurs.

The death of a loved one can be an overwhelming experience. In many cases, survivors are trying to cope with their grief as well as arrange a funeral service. It is enormously helpful at this difficult time to rely on the advice of a specially trained, licensed funeral director. Most families will call on the same funeral director they've turned to in the past to help them arrange the funeral. If there is no family funeral director, it is a good idea to secure recommendations from friends or neighbors or access this Web site for names and addresses of member funeral homes located in the decedent's neighborhood. The first step is to call the funeral home for a conference to begin the process. If a death occurs in another city, state or country away from home it is best to call your hometown funeral director to make the necessary arrangements. Before making any arrangements, determine if the deceased left any instructions about his or her funeral, or had already purchased or prepaid funeral or cemetery arrangements. Funeral arrangements made prior to death should be honored. Preplanning one's funeral is a growing trend that ensures peace of mind and relieves the individual's loved ones of a decision-making process at a stressful time. Be sure to check to see if the deceased had any death benefits that would help cover funeral costs. Be aware that signing a contract for funeral services will make you liable for the cost of the funeral but the decedent’s estate or available death benefits will usually cover final costs. It is important to always check with your family attorney. By law, funeral directors must offer accurate price information to people making inquiries over the telephone regarding funeral costs. If you visit the funeral home, the funeral director will give you a written, itemized price list with all the specific goods and services the funeral home offers. It is good to remember that it is entirely up to the family to make the selections that will best meet their expectations for a personalized ritual that will meet their emotional and economic needs. After the arrangements have been agreed upon, the funeral director will provide a written statement showing the total cost of each item selected. In addition to removing the deceased from the place of death and caring for the body, the funeral director will arrange all details of the funeral service which may include: contacting clergy and arranging an appropriate time and place for the services writing and distributing obituaries contacting the cemetery/crematory, staff, florists, fraternal organizations, memorial gift organizations working cooperatively with organ donation teams preparing all legal documents (death certificates, burial transit/cremation permits, medical examiner certificates, reports of death, social security and all Veterans Administration benefits, and in some instances filing insurance paperwork) providing an emotionally and spiritually comforting environment for visitation and life celebration services transporting of family and friends in a funeral procession to the place of final disposition The funeral director provides quiet support to the family during a time of great emotional stress, and attends to all aspects of the funeral service in a professional and caring way. Always remember that any questions you may have may be directed to your local funeral director. For further information, contact: Benson Family Funeral Home of Chicago at 773-478-5800 http://www.bensonfamilyfuneralhome.com/