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No tax respite for funeral expenses

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in Small Business Tax

Q. I’ve just received an offer for prepaid funeral expenses. Can I deduct the cost? S.B., Newport, R.I.

A. Sorry, no. Deductions aren’t allowed on a personal tax return whether they are prepaid or not. For the funeral expenses of an estate, a deduction can be claimed on the estate tax return if the payments came out of the estate’s funds. This item is reported on Form 706, United States Estate (and Generation Skipping Transfer) Tax Return.

Tip: If funeral expenses are reimbursed (e.g., under a Department of Veterans Affairs program), the reimbursements must be reported on Form 706 as well.

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