Executor Tax Checklist: What Expenses Are Deductible After Death
When someone dies, their final income tax return (Form 1040) and possibly their estate tax return (Form 706) may qualify for deductions that reduce the tax burden. Executors, administrators, and families often miss these — but knowing what qualifies can save time, money, and stress during probate. Here’s your checklist.
Note: For simplicity, we’ll use Form 1040 as shorthand for an individual’s final income tax return and Form 706 for the estate tax return. If you want a more complete breakdown on death and taxes, check out our deep dive post.
Medical Expenses Deductible on Final Tax Return (Form 1040 or 706)
Deductible on the final return: Medical bills paid within one year of death can often be deducted on a person’s final income tax return (Form 1040). It’s the date of payment (within one year of death) that matters, not the date of service or billing.
For Example: A surgery happens in March, the person dies in July, and the estate pays the hospital bill in October. Even though the procedure was months before death, the payment was within one year of death → it qualifies.
The administrator can also choose to deduct any medical expenses instead on the estate tax return (Form 706), if one is required.
Tip: Keep detailed records of bills, payments, and the date services were provided. Timing matters.
This is one reason to stay on top of estate administration so you can tap into these possible savings.
Funeral Expenses Deductible on Estate Tax Return (Form 706)
Potentially deductible on Form 706 (Estate Tax deduction only): If the estate is large enough to require a federal estate tax return (only estates over $13.61M in 2024), funeral expenses can reduce the taxable value of the estate.This only applies to less than 1% of estates.
I am not even going to elaborate on this in more detail because if you inherited this much money you have a fancy tax person handling this deduction for you.
How Outstanding Debts Reduce the Estate’s Value for Taxes
Debts owed at the time of death (credit cards, mortgages, personal loans) are not deductions on the final 1040, but they may reduce the estate’s value for estate tax purposes.
If the estate is subject to estate tax, these obligations are subtracted before the estate tax is calculated.
Administrative Costs Executors Can Deduct on Form 706
Certain administration expenses may be deductible on the estate tax return. Use Estate Tax return Form 706.
These dedications can include:
Executor and attorney fees
Court costs and probate expenses
Appraisal fees for property
Costs of safeguarding or managing estate property during probate
Again, another reason to keep the receipts.
Charitable Bequests and Estate Tax Deductions
If the deceased left gifts to qualified charities in their will, those amounts reduce the taxable estate value. Use Estate Tax return Form 706 (Estate Return).
These gifts must be clearly spelled out in the will or estate plan to qualify.
State Estate and Inheritance Tax Deductions
Some states impose their own estate or inheritance taxes, with different rules for deductions.
Executors should always check local laws, especially since some states have lower exemption thresholds.
Final Executor Tips for Claiming Tax Deductions After Death
Not all expenses after death are deductible, but some major ones like medical bills, and administration fees can reduce tax obligations for the estate or final return. Knowing where and the process to claim them is key.
Comparison Table
| Deduction Type | Applies To | Form | Notes |
|---|---|---|---|
| Medical Expenses | Individual | 1040 | Must be paid within 1 year of death |
| Funeral Expenses | Estate | 706 | Only estates > $13.61M (2024) |
| Debts (mortgage, loans) | Estate | 706 | Reduce taxable estate value |
| Admin Costs (executor, legal fees) | Estate | 706 | Must be documented |
| Charitable Bequests | Estate | 706 | Must be spelled out in will or plan |
⭐ Important Note:
We’re not lawyers, just Death Care technology folks trying to help humans with death literacy and navigating the logistics of loss. If you need specific advice about your individual situation we recommend you do specific research for your state and/or reach out to a legal professional.