- November 16, 2023
- Posted by: Aki Kojima
- Category: Inheritance, Gift, Equity Valuation
It would be best if you kept receipts for funeral services, as they will be helpful in subsequent inheritance tax filings and for proving advances to other family members.
However, what if there are expenses for which you cannot get a receipt?
Examples of expenses for which you can’t obtain receipts
Why can’t you get a receipt for the cost of Kaimyou (posthumous Buddhist name) or a gratuity at a temple?
The income is religious-related; they recognize it as gratuities, not service compensation.
We should consider whether there is service compensation, not just the name of gratuity.
For example, when you request a lawyer or a tax accountant to give a lecture, the gratuity is the consideration for receiving the service of providing the lecture.
However, in the case of a temple, it is recognized as a gratuity for religious activities and is not considered compensation for services. You don’t get a receipt for your money alms, do you? With that mindset, you often do not get a receipt.
Kaimyou and gratuity
Kaimyou and gratuities are deductible as “expenses for which you have paid a temple or other institution a fee for reading sutras or additional gratuities in connection with the funeral ceremony“.
Note, however, that these need to be average amounts and not deductible if the payment is too high.
Sometimes, such as in Christian ceremonies, you may pay an organist or choir fee. This is also deductible because it includes “expenses paid to temples and other institutions for funeral services, such as scripture reading fees“.
Keep a record.
If you do not receive a receipt, keep a record including the following information.
- Name of the temple, etc.
- Contact information
- Date of payment
By keeping records, you can use them for later calculations.
When someone passes away, you would be tied up with various treatments, and it causes detailed records to be neglected. Be careful and keep records.
Check the law based on
Note that the deductible expenses are listed as follows.
No.4129 Funeral expenses deductible from inheritance
Funeral expenses to be deducted from the gross estate usually include the following.
(1) Expenses incurred for the cremation, burial, and delivery of the remains at or before the funeral or burial (if both a provisional funeral and a formal funeral are held, the expenses incurred for both are allowable).
(2) Expenses incurred in transporting the body or remains
(3) Expenses incurred before and after the funeral ceremony that are not generally associated with a funeral (e.g., expenses incurred at a wake, etc.)
(4) Expenses incurred in paying a temple or other institution a fee for sutra chanting or other services at the time of the funeral
(5) Expenses spent searching the corpse or transporting the corpse or remains.
The expenses for the First Seventh day and Forty-Ninth day of Ceremony Costs are not deductible from Inheritance Tax calculation in Japan.
If you require assistance, I am available for consultations regarding inheritance tax and gift tax.