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Placing the deduction for funeral expenses

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. As the estate’s executor, can I deduct funeral expenses for a family member on his federal income tax return? J.G.R., Utica, N.Y.

A. No. Funeral expenses aren’t deductible. However, if you must file Form 706, (U.S. Estate and Generation-Skipping Transfer), the estate can then deduct the funeral expenses in calculating its federal estate tax liability. Form 706 is required to be filed when nonspousal beneficiaries receive more than the federal exemption amount ($5.25 million for 2013). Otherwise, there is no tax benefit of any kind for paying funeral expenses.

Tip: The federal estate tax return generally has to be filed within nine months of death, but an executor can apply for a six-month extension, if needed.

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