According to Intuit Turbo Tax, an individual taxpayer is not permitted to deduct funeral expenses on a tax return. A taxpayer can only deduct funeral expenses as part of an estate. Internal Revenue Service regulations state that most taxpayers do not qualify for this deduction.
If a taxpayer used the estate's fund to pay for the cost of a funeral, the taxpayer needs to use Form 706 to determine the tax liability of the estate and Schedule J to report the funeral expenses. The funeral expenses need to be itemized. This deduction, if used, helps to lower the taxable income of the estate, according to Intuit Turbo Tax.