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Tax Talk with George Saenz

Ask the tax adviser

When funeral expenses are deductible

Dear Tax Talk:
My son passed away in July 2001. The funeral expenses exceeded $8,000. Will any of these be tax deductions? Thank you for your time

Dear Mark:
I have received a few questions on the same topic. There's some confusion in this area because funeral expenses are deductible, but only for the purposes of estate taxes, not for income tax.

Estate taxes apply to a decedent's estate if that person dies leaving an estate worth more than $675,000 in 2001 (going to $1 million in 2002). If the decedent has a taxable estate, then the funeral expenses are allowed as a deduction against the value of his assets. This then reduces the estate taxes payable.

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For income tax purposes, when it comes to filing your Form 1040, funeral expenses are not allowed as a deduction. They are not considered medical expenses. Neither are they miscellaneous itemized deductions. Expenses for medical care related to a last illness would be deductible to the extent not reimbursed by insurance.

-- Posted: March 14, 2002

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