On September 4, 2014, comedy icon Joan Rivers passed away. It's no secret that Rivers hoped for a funeral that rivaled her lifestyle: big and over the top.
Craft services. Paparazzi. Meryl Streep crying in five different accents. These are just a few of the wishes the late Joan Rivers had for her Hollywood funeral. Those arrangements, Forbes reports–Meryl Streep notwithstanding–would be easy to arrange with the late Joan Rivers’ money. The article is titled"Saying Goodbye To Joan Rivers: The Bigger The Funeral, The Bigger The Tax Deduction?"
Rivers' income from book royalties, appearance fees and salary at E! Television, plus sales of her QVC merchandise may have exceeded $1 billion. So, Joan could afford the big farewell.
The article mentions that Joan would have liked the fact that the expenses associated with her funeral are tax deductible for federal estate tax purposes. However, she would say, "Can We Talk?" about her estate being reduced by federal estate taxes in the first place. No one is certain of the exact amount of Rivers’ fortune, but even with estate planning her estate is probably going to owe a chunk of change to the government.
If a loved one passes this year, the exemption is $5,340,000, which means federal estate taxes are due on estates over that amount. But remember, the estate may claim some deductions against the gross estate, one of which is for funeral expenses. There is no dollar limit on the amount you can claim, but the deduction is limited to an amount “allowable under local law.” Forbes notes that this basically means that you cannot claim more in deductions than you can claim in assets. Deductible expenses in this area include funeral home and burial costs, as well as church services.
Remember you may only claim the deduction on the federal estate tax return for funeral expenses—not on your personal income tax return. Talk with your estate planning attorney to learn more.
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Reference: Forbes (September 7, 2014) "Saying Goodbye To Joan Rivers: The Bigger The Funeral, The Bigger The Tax Deduction?"