Funeral Director & Embalmer Tax Deductions: 2026 Schedule C Guide for Self-Employed Funeral Professionals

Published: October 2, 2026 · Reading time: 13 min

TL;DR: A self-employed funeral director or embalmer files Schedule C and pays self-employment tax on net profit like any other business owner. Four mechanics make this return genuinely different from the rest of this corpus. First, caskets, urns, and outer burial containers usually skip Schedule C's formal Part III inventory — the §471(c) small-business exception (2026 gross-receipts threshold: $32,000,000) lets you deduct their wholesale cost as an ordinary expense in the year each is sold. Second, a hearse is automatically a "qualified nonpersonal use vehicle" under Treas. Reg. §1.274-5(k)(2)(ii) — named on the list alongside ambulances, with no modification argument required — which also takes it out of the §280F luxury-auto caps and listed property entirely. A removal or first-call van gets none of that automatically, and the industry's own habit of leaving that van unmarked for discretion works directly against the harder test that applies to it. Third, a funeral home is a fixed place of business, so — unlike several mobile trades already covered in this corpus — the ordinary commuting rule applies to your drive from home to the funeral home itself; but because the funeral home gives you a regular work location away from home, Publication 463's own temporary-work-location exception makes a removal trip deductible whether it routes through the funeral home or goes straight from home to the hospital, hospice, residence, or medical examiner's office on an after-hours call. Fourth, mortuary school and your apprenticeship are nondeductible personal education costs, while continuing education to renew an existing license is fully deductible — a line that Treas. Reg. §1.162-5 draws explicitly. On the QBI side, funeral service is a clean "not an SSTB" call — unlike veterinarians, named directly in the health-field regulation — but the deduction is still checked against the 20%-of-taxable-income cap that binds regardless of SSTB status. Mileage uses the July 1 rate split ($0.725 to $0.76/mile). The worked example below runs a realistic solo-funeral-home year.

Most self-employed trades in this corpus either sell nothing (a pure service business) or resell finished goods with no professional-licensing overlay. A self-employed funeral director's or embalmer's return does neither cleanly: the business genuinely sells merchandise — caskets, urns, outer burial containers — purchased wholesale and marked up at retail, alongside a licensed professional service, using at least one vehicle (the hearse) whose tax treatment is written directly into the regulations by name. That combination is what drives everything below: an inventory question most pure-service trades never face, a vehicle rule more favorable than almost any other vehicle in this corpus gets, a second vehicle that doesn't get the same favorable rule for reasons specific to how this industry operates, and an education-expense line that most licensed trades in this corpus never have to draw as sharply.

Before Anything Else: Practice Owner or Misclassified On-Call Embalmer?

This changes whether the rest of this guide even applies to you. A funeral director or embalmer who owns the practice — sets rates and schedule, supplies instruments and embalming chemicals, and isn't tied exclusively to one funeral home — has a straightforward claim to genuine self-employment. The classification risk in this field runs the other way: an embalmer paid per case by a single funeral home that sets the hours, dictates methods, and supplies the prep room and chemicals looks like a common-law employee regardless of the 1099-NEC issued at year end. State licensing requirements for funeral directors and embalmers are a separate question from payroll-tax classification, which turns on behavioral and financial control, not licensure. This guide assumes the practice-owner fact pattern; if a single funeral home functions as your employer in substance, the more important question is whether you should be receiving a W-2 — see this corpus's 1099-vs-W-2 worker-classification test and Form 8919.

Merchandise: Why Caskets, Urns, and Outer Burial Containers Don't Need a Formal Inventory (Line 22)

This is the mechanic worth understanding first, because it looks like it should require real inventory accounting and mostly doesn't. A funeral home genuinely buys caskets, urns, and outer burial containers wholesale and sells them to client families at a marked-up price — that looks exactly like a retail-inventory business, the kind that normally runs beginning and ending inventory through Schedule C's Part III.

26 U.S.C. §471(c), added by the 2017 Tax Cuts and Jobs Act, changes that for almost every solo or small family-run operation. Any taxpayer that meets the gross-receipts test of §448(c) — for 2026, an average of $32,000,000 or less in annual gross receipts over the prior three years (Rev. Proc. 2025-32) — can, under §471(c)(1)(A), have subsection (a)'s formal inventory rules simply "not apply," and under §471(c)(1)(B)(i), treat inventory "as non-incidental materials and supplies" instead. In practice, that means the wholesale cost of a casket, urn, or outer burial container is deducted as an ordinary Schedule C expense in the year it's actually sold to a family — not tracked through a beginning/ending inventory calculation in Part III. The statute also permits a qualifying business to instead simply conform to whatever its own books and records already do (§471(c)(1)(B)(ii)) — both options are legitimate, and the materials-and-supplies method is simpler for most solo and small family-run funeral homes with no dedicated bookkeeping staff. A $32,000,000 threshold covers essentially any solo or small operation by a wide margin, so this isn't a close call for most readers of this guide.

What doesn't go away: any state-specific preneed-trust or merchandise-trust recordkeeping requirement for funds collected in advance of need is a separate legal obligation from this tax-accounting election — and this election is about inventory accounting, not about whether the expense is deductible; it always was.

On Schedule C, the wholesale cost of merchandise sold this year is deducted on Line 22 (Supplies), alongside embalming chemicals, PPE, and biohazard-waste disposal consistent with OSHA's Bloodborne Pathogens Standard (29 CFR §1910.1030), and instrument purchases — a replacement trocar, aspirator parts, restorative-art tools — which separately qualify for the de minimis safe harbor under Notice 2015-82 at $2,500 or less per item.

Professional Liability Insurance — Line 15

Professional liability (errors-and-omissions) insurance covering a misidentification, a mishandling claim, or an embalming or restorative-art error is a straightforward Line 15 deduction. Your own personal health insurance is separate — claimed through the self-employed health insurance deduction on Schedule 1, not here.

State Licenses and Establishment Fees — Line 23

A solo or small funeral business typically carries several separate renewal fees: a state funeral establishment license for the business itself, an individual funeral director license, and, if you personally embalm, a separate embalmer license. Each renewal fee is a licensing cost for carrying on the trade — Line 23 (Taxes and licenses), deducted in the year paid, the same treatment this corpus gives any other professional license or registration renewal.

The Two Vehicles: Why Your Hearse Doesn't Need a Modification Argument (and Your Removal Van Does)

This is the mechanic most distinctive to this trade in the whole corpus, and it only matters if you're buying the vehicle outright and electing depreciation rather than the standard mileage rate — you can't use both on the same vehicle in the same year.

The hearse is on the list by name. 26 U.S.C. §274(i) defines a "qualified nonpersonal use vehicle" as "any vehicle which, by reason of its nature, is not likely to be used more than a de minimis amount for personal purposes." Treas. Reg. §1.274-5(k)(2)(ii) then gives an enumerated list of vehicles that qualify outright — and clause (B) reads, in full: "Ambulances used as such or hearses used as such." No modification argument is required; the vehicle type itself is enough. That status does real work through two other regulations. Treas. Reg. §1.280F-6(c)(3) excludes "Ambulance, hearse, or combination ambulance-hearse used by the taxpayer directly in a trade or business" from the "passenger automobile" definition entirely — so the §280F annual depreciation caps never apply, regardless of the vehicle's weight. And Treas. Reg. §1.280F-6(b)(2)(ii) excludes any qualified nonpersonal use vehicle from "listed property" altogether, which also switches off the §274(d) per-trip mileage log under Treas. Reg. §1.274-5(k)(1).

This is worth being more valuable here than it is for a heavy service truck elsewhere in this corpus. The well-known escape from the luxury-auto caps is gross vehicle weight over 6,000 pounds — but most funeral coaches are coach-built on sedan- or crossover-based professional chassis, and plenty of them don't clear that line. For a hearse, the named §1.274-5(k)(2)(ii) exception is frequently the only escape available, not a backup to the weight test.

The removal van is not on that list. A first-call or removal van — used for the unglamorous, everyday work of transporting remains from a hospital, hospice, private residence, or medical examiner's office to the prep room — is not "a hearse ... used as such." It's governed instead by Treas. Reg. §1.274-5(k)(8), the ordinary pickup-and-truck rule, which starts from the opposite presumption: the regular substantiation and depreciation rules "apply generally to any pickup truck or van, unless the truck or van has been specially modified with the result that it is not likely to be used more than a de minimis amount for personal purposes." The regulation's own example stacks four features: only a front bench for seating, permanent shelving filling most of the cargo area, constant carriage of cargo, and — the fourth factor — "specially painted with advertising or the company's name."

That fourth factor is where this trade runs into its own professional norms. Most funeral homes deliberately keep the removal van unmarked, out of discretion for the family being served and the broader public — the opposite of the branded, lettered service van the regulation's example describes. A van that otherwise carries a cot and stretcher system but stays unbranded for exactly that reason doesn't meet the four-factor test, and remains an ordinary "passenger automobile" under Treas. Reg. §1.280F-6(c)(1), subject to the regular luxury-auto caps.

node -e "
const fmt = n => n.toLocaleString('en-US', {minimumFractionDigits:2, maximumFractionDigits:2});
const sum = arr => arr.reduce((a,b)=>a+b,0);

// Hearse: named QNUV under Treas. Reg. 1.274-5(k)(2)(ii)(B) -- 'hearses used as such.'
// GVWR 5,900 lbs (sedan-based professional chassis) -- would NOT escape Sec 280F by weight alone.
// Not a 'passenger automobile' (1.280F-6(c)(3)(i)), not listed property (1.280F-6(b)(2)(ii)).
const hearseCost = 72000;
const hearseDeduction = hearseCost; // Sec 168(k) 100% bonus, no Sec 280F cap, no taxable-income limit

// Removal van: unmarked by industry norm, retains a rear attendant bench -- fails the
// 1.274-5(k)(8) four-factor test. Ordinary passenger automobile, placed in service 2026.
// Rev. Proc. 2026-15 Table 1 caps apply (100% bonus elected).
const removalVanCost = 38000;
const cap1 = 20300, cap2 = 19800, cap3 = 11900, capSucceeding = 7160; // year 1, 2, 3, and 4-plus/'succeeding year'
const yearCaps = [cap2, cap3, capSucceeding, capSucceeding, capSucceeding]; // years 2-6
const safeHarborRates = [0.32, 0.192, 0.1152, 0.1152, 0.0576]; // Rev. Proc. 2019-13 Sec.4 table (5-yr property, 200% DB, half-year convention)

const van1 = Math.min(removalVanCost, cap1);
const unrecoveredBasis = removalVanCost - van1; // Sec 280F(a)(1)(B) 'unrecovered basis' after year 1

// DEFAULT -- no Rev. Proc. 2019-13 election: Sec 280F(a)(1)(B) allows ZERO deduction for the
// unrecovered basis in years 2-6 of the van's 5-year recovery period -- the 'anomalous result'
// the rev. proc. itself names in Sec 4.02 -- then sweeps it in starting the first tax year AFTER
// the recovery period ends (year 7 = 2032), subject each year to that year's own annual cap.
let remD = unrecoveredBasis, defaultSweep = [];
while (remD > 0.0001) {
  const d = Math.min(remD, capSucceeding);
  defaultSweep.push(d);
  remD -= d;
}

// Rev. Proc. 2019-13 Sec.4 SAFE-HARBOR election: apply the ordinary optional-depreciation-table
// rate to the unrecovered basis each year 2-6, capped by that year's own Sec 280F(a)(1)(A) limit;
// any leftover is swept into year 7, same as the default rule.
let remSH = unrecoveredBasis, safeHarborYears = [];
for (let i = 0; i < 5; i++) {
  const d = Math.min(remSH, unrecoveredBasis * safeHarborRates[i], yearCaps[i]);
  safeHarborYears.push(d);
  remSH -= d;
}
let safeHarborSweep = [], remSH2 = remSH;
while (remSH2 > 0.0001) {
  const d = Math.min(remSH2, capSucceeding);
  safeHarborSweep.push(d);
  remSH2 -= d;
}

console.log('Hearse year-1 deduction (named QNUV, 100% bonus):', fmt(hearseDeduction));
console.log('Removal van year 1 (2026) | cap', fmt(cap1), '| deducted', fmt(van1), '| unrecovered basis', fmt(unrecoveredBasis));
console.log();
console.log('DEFAULT (no Rev. Proc. 2019-13 election) -- years 2-6 (2027-2031): \$0.00 every year');
console.log('DEFAULT sweep starting year 7 (2032+):', defaultSweep.map(fmt).join(' | '), '| sum', fmt(sum(defaultSweep)));
console.log('DEFAULT total tax years elapsed before the van basis is fully recovered:', 1 + 5 + defaultSweep.length);
console.log();
console.log('Rev. Proc. 2019-13 Sec.4 SAFE HARBOR -- years 2-6 (2027-2031):', safeHarborYears.map(fmt).join(' | '), '| sum', fmt(sum(safeHarborYears)));
console.log('SAFE HARBOR final sweep, year 7 (2032):', safeHarborSweep.map(fmt).join(' | '));
console.log('SAFE HARBOR total tax years elapsed before the van basis is fully recovered:', 1 + safeHarborYears.length + safeHarborSweep.length);
console.log();
console.log('Combined Line 9 deduction, year 1 (unaffected by the schedules above):', fmt(hearseDeduction + van1));
console.log('Deduction the van loses in year 1 purely from not qualifying as a QNUV:', fmt(removalVanCost - van1));
"

Output:

Hearse year-1 deduction (named QNUV, 100% bonus): 72,000.00
Removal van year 1 (2026) | cap 20,300.00 | deducted 20,300.00 | unrecovered basis 17,700.00

DEFAULT (no Rev. Proc. 2019-13 election) -- years 2-6 (2027-2031): $0.00 every year
DEFAULT sweep starting year 7 (2032+): 7,160.00 | 7,160.00 | 3,380.00 | sum 17,700.00
DEFAULT total tax years elapsed before the van basis is fully recovered: 9

Rev. Proc. 2019-13 Sec.4 SAFE HARBOR -- years 2-6 (2027-2031): 5,664.00 | 3,398.40 | 2,039.04 | 2,039.04 | 1,019.52 | sum 14,160.00
SAFE HARBOR final sweep, year 7 (2032): 3,540.00
SAFE HARBOR total tax years elapsed before the van basis is fully recovered: 7

Combined Line 9 deduction, year 1 (unaffected by the schedules above): 92,300.00
Deduction the van loses in year 1 purely from not qualifying as a QNUV: 17,700.00

On a $72,000 hearse, full first-year expensing is automatic — no modification, no mileage log, no §280F cap. On a $38,000 removal van that is, by design and for good reason, not branded like a service vehicle, the first-year deduction caps at $20,300.00, and the remaining $17,700.00 becomes "unrecovered basis" under §280F(a)(1)(B) — not a lump sum the IRS hands back in year two. By default, §280F(a)(1)(B) doesn't let you deduct any of it in years two through six at all; it sweeps in starting the first tax year after the van's own 5-year recovery period ends, capped annually, which here takes three more years to fully clear (nine tax years elapsed in total). Electing the Rev. Proc. 2019-13 §4 safe harbor recovers it faster — applying the ordinary 5-year MACRS table's rate to the $17,700 each year instead, only $5,664.00 of it in year two — with the remainder swept in a final year-seven payment, for seven tax years total. Either way, it is not "two tax years to recover the basis": see this corpus's EV and business-vehicle depreciation guide for the same default-vs-safe-harbor mechanic applied to a different vehicle. Both vehicles here are 100% business-use; the gap comes entirely from one phrase in one regulation — "hearses used as such" — that reaches one vehicle and not the other. Nothing here requires electing depreciation at all: the standard mileage rate remains available for either vehicle instead, and Section 179 is a further alternative to bonus depreciation on the hearse, subject to the 2026 aggregate §179 limit of $2,560,000 and the taxable-income limitation that bonus depreciation doesn't have.

Mileage: Why "No Regular Hours" Doesn't Mean "No Fixed Location"

Several mobile trades already covered in this corpus — a farm-call veterinarian, a mobile mechanic — have no fixed clinic or shop, which opens up favorable mileage rules under IRS Publication 463. A funeral director or embalmer who owns a funeral home does not get that treatment, and it's worth being explicit about why, since the comparison runs the opposite direction from most of this corpus.

Publication 463 states the general rule plainly: "Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses." A funeral home — with its own office, chapel, and prep room — is exactly a "regular place of business," so a plain drive from home to the funeral home, with no case attached, is ordinary commuting regardless of how early, late, or irregular the hours are. The exception that lets some other trades in this corpus deduct every mile from home — §280A(c)(1), which treats a qualifying home office as the "principal place of business" when "there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business" — specifically requires the absence of exactly the kind of fixed location a funeral home is. It doesn't open up here — though a different, narrower exception does, covered next.

What is deductible is broader than "only trips that touch the funeral home." Publication 463 immediately qualifies its own general rule: "If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance." The funeral home is the "regular work location away from home" that condition requires; a hospital, hospice, private residence, or medical examiner's office you drive to for a case is the "temporary work location" — a single, non-recurring stop, not a second regular place of business. That makes two different trips deductible, not one: a removal trip that runs funeral home → pickup location → funeral home (ordinary transportation between two business locations), and a trip that runs straight from home to the pickup location — on an after-hours call, without ever routing through the funeral home first. Both are deductible under Publication 463's own temporary-work-location exception regardless of distance or time of day; only a drive from home to the funeral home with no removal case attached is nondeductible commuting.

Either method, for whichever vehicle doesn't use depreciation:

• Standard mileage rate: 2026 has two rates because the IRS revised the rate mid-year, confirmed directly from the IRS standard mileage rates page. $0.725 per mile January 1 through June 30 (IR-2025-128), and $0.76 per mile from July 1, 2026 onward (IR-2026-29).
• Actual expenses: fuel, insurance, repairs, and depreciation × business-use percentage — covered above for the hearse and removal van.

Removal calls arrive on no predictable schedule, which makes a contemporaneous mileage log as important here as anywhere else in this corpus.

Continuing Education vs. Mortuary School: Where the Line Actually Falls

This trade draws a sharper version of a distinction most licensed professions in this corpus only touch lightly, because the gap between "getting licensed" and "staying licensed" is unusually large here — mortuary science programs typically run one to two years, plus a separate apprenticeship.

Treas. Reg. §1.162-5(a) sets the general rule: education expenses are deductible if the education "(1) Maintains or improves skills required by the individual in his employment or other trade or business, or (2) Meets the express requirements of ... applicable law or regulations ... imposed as a condition to the retention" of the position — in other words, continuing education required to renew a license you already hold.

Two categories are carved out as nondeductible, and both apply squarely to the path into this trade. §1.162-5(b)(2) disallows "expenditures made by an individual for education which is required of him in order to meet the minimum educational requirements for qualification in his employment or other trade or business" — your mortuary science degree. §1.162-5(b)(3) separately disallows education "which is part of a program of study ... which will lead to qualifying him in a new trade or business" — your licensed apprenticeship hours, completed before you held the license at all. Both categories describe the same thing from different angles, and both describe the education that gets you into this profession in the first place. Because that education happens before you're licensed and in business, it's a personal expense that never shows up on a Schedule C at all — not even as a disallowed line item, since there's no business yet to put it on.

Once licensed, the calculus flips. State-mandated continuing-education hours required to renew an existing funeral director or embalmer license, and courses or conference registration from a trade association like the National Funeral Directors Association, are deductible under §1.162-5(a)(1) — they maintain skills in a trade you're already licensed for, and that's a different act from qualifying for it the first time. Deduct these on Line 27a (Other expenses).

Advertising, Contract Labor, and Everything Else

• Advertising (Line 8): a funeral-home website, obituary-placement fees you pay directly, and local community outreach.
• Contract labor (Line 11): an on-call embalmer you pay per case to cover nights or weekends. The information-reporting threshold for issuing that person a Form 1099-NEC is $2,000 for payments made after December 31, 2025, up from the prior $600 figure, per OBBBA §70433 — confirmed directly from the enacted statutory text (Public Law 119-21).
• Quarterly estimated taxes: case volume and the merchandise mix can swing meaningfully from quarter to quarter, which distorts a flat estimate if it isn't planned for.

The QBI Deduction: A Clean "Not an SSTB" Call, Checked Against the Other Two Limits Anyway

Treas. Reg. §1.199A-5(b)(1) is the exhaustive list of fields that make a business an SSTB: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investing and investment management, trading, dealing in securities, and a narrow reputation-or-skill catch-all. Funeral directing and embalming don't fit any of them.

Not health. §1.199A-5(b)(2)(ii) defines the field by naming professions directly: "the provision of medical services by individuals such as physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists, and other similar healthcare professionals performing services in their capacity as such." Funeral directors and embalmers serve families, not patients, and don't appear on or near that list.

Not consulting. §1.199A-5(b)(2)(vii) defines consulting as "the provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems," and explicitly excludes "the performance of consulting services embedded in, or ancillary to, the sale of goods or performance of services on behalf of a trade or business that is otherwise not an SSTB ... if there is no separate payment for the consulting services." An at-need arrangement conference — helping a grieving family choose services and merchandise — is advice bundled into the sale of those services and that merchandise, with no separately billed consulting fee. That's the regulation's own carve-out, not a stretch.

Not the reputation-or-skill catch-all. §1.199A-5(b)(2)(xiv) defines that category narrowly as exactly three things: fees for endorsing products or services, fees for licensing an individual's image, likeness, or signature, and fees for appearing at an event or in media. A service fee or a marked-up casket sale is none of those.

Not law, accounting, actuarial science, performing arts, athletics, financial services, brokerage, trading, or dealing in securities — plainly inapplicable on their face. And notably, engineering and architecture are excluded from the SSTB definition by statute, not by the regulation Treasury wrote to implement it: §199A(d)(2)(A) defines an SSTB as a business "described in section 1202(e)(3)(A) (applied without regard to the words 'engineering, architecture')" — Congress wrote those two fields out of the cross-referenced list directly in the Internal Revenue Code. Treas. Reg. §1.199A-5(b)(1) simply reflects that statutory text; it didn't independently choose to leave them off.

That clean non-SSTB classification still doesn't end the analysis. Two other limits under §199A apply to every pass-through business, SSTB or not:

1. W-2 wage / 2.5%-of-property cap — only engages above the 2026 threshold: $201,750 single/head-of-household, $403,500 married filing jointly (Rev. Proc. 2025-32). A solo or small-staff funeral business clears it easily below that level.
2. 20%-of-taxable-income cap — applies to every filer at every income level. §199A(a)(2) caps the deduction at the lesser of 20% of qualified business income or 20% of taxable income over net capital gain, with taxable income computed under §199A(e)(1) without regard to the QBI deduction itself. This is the cap that actually binds in most solo years, SSTB or not.

New for 2026: §199A(i), added by OBBBA §70105, sets a minimum QBI deduction of $400 for a taxpayer who materially participates and has at least $1,000 of aggregate qualified business income — a floor that only matters for a very small or part-time operation.

A Realistic Solo Year

A single-filer sole proprietor running a small, owner-operated funeral home — direct cremation and basic/full-service burial, standard deduction, 2026. She handles most cases personally and pays an on-call embalmer for occasional night and weekend coverage. She owns a hearse (an automatic QNUV) and a removal van (an ordinary vehicle, since it's intentionally unmarked), and deducts merchandise under the §471(c) materials-and-supplies method:

node -e "
const fmt = n => n.toLocaleString('en-US', {minimumFractionDigits:2, maximumFractionDigits:2});

const cases = 95; // total cases this year -- direct cremation + basic/full-service burial mix
const serviceFeePerCase = 2400; // blended avg professional-services/facility/staff/transportation fee, excludes merchandise
const serviceRevenue = cases * serviceFeePerCase;

const merchandiseWholesaleCost = 42000; // wholesale cost of caskets, urns, outer burial containers SOLD this year (not every case buys merchandise)
const markupPct = 0.75;
const merchandiseRevenue = merchandiseWholesaleCost * (1 + markupPct);

const grossReceipts = serviceRevenue + merchandiseRevenue; // Line 1 -- no Part III COGS under the Sec 471(c) method

const embalmingSuppliesChemicals = 5400; // arterial/cavity fluid, cosmetics, PPE, biohazard waste disposal
const instrumentPurchases = 1850; // replacement trocar, aspirator parts, restorative-art tools, <= \$2,500 each (de minimis safe harbor)
const suppliesLine22 = merchandiseWholesaleCost + embalmingSuppliesChemicals + instrumentPurchases;

const liabilityInsuranceLine15 = 3400;

const taxesAndLicensesLine23 = 450 + 150 + 150; // funeral establishment license + director license + embalmer license renewals

const advertisingLine8 = 2200;
const contractLaborLine11 = 4200; // on-call relief embalmer, 1099-NEC required (\$2,000 OBBBA threshold)
const continuingEducationOther = 1100; // state-mandated CE + NFDA convention -- maintains an EXISTING license, Sec 1.162-5(a)(1)

const hearseDeduction = 72000; // named QNUV, 100% bonus, no Sec 280F cap
const removalVanY1 = 20300; // ordinary passenger automobile, Rev. Proc. 2026-15 Table 1 cap
const vehicleLine9 = hearseDeduction + removalVanY1;

const partIIExpenses = suppliesLine22 + liabilityInsuranceLine15 + taxesAndLicensesLine23 + advertisingLine8 + contractLaborLine11 + continuingEducationOther + vehicleLine9;
const netProfit = grossReceipts - partIIExpenses;

const seTaxable = netProfit * 0.9235; // well under any 2026 Social Security wage base
const seTax = seTaxable * 0.124 + seTaxable * 0.029;
const halfSeTaxDeduction = seTax / 2;

const standardDeduction = 16100; // 2026 single, Rev. Proc. 2025-32
const qbi = netProfit - halfSeTaxDeduction;
const taxableIncomeBeforeQBI = netProfit - halfSeTaxDeduction - standardDeduction; // Sec 199A(e)(1): WITHOUT the QBI deduction itself

const tentativeQbiDeduction = qbi * 0.20;
const taxableIncomeCap = taxableIncomeBeforeQBI * 0.20; // net capital gain = 0
const regularQbiDeduction = Math.min(tentativeQbiDeduction, taxableIncomeCap);
const qbiDeductionAllowed = Math.max(regularQbiDeduction, qbi >= 1000 ? 400 : 0); // Sec 199A(i) floor, new for 2026

const finalTaxableIncome = taxableIncomeBeforeQBI - qbiDeductionAllowed;

console.log('serviceRevenue (95 cases x \$2,400)', fmt(serviceRevenue));
console.log('merchandiseRevenue (75% markup on \$42,000 wholesale)', fmt(merchandiseRevenue));
console.log('grossReceipts (Line 1)', fmt(grossReceipts));
console.log('suppliesLine22', fmt(suppliesLine22));
console.log('liabilityInsuranceLine15', fmt(liabilityInsuranceLine15));
console.log('taxesAndLicensesLine23', fmt(taxesAndLicensesLine23));
console.log('advertisingLine8', fmt(advertisingLine8));
console.log('contractLaborLine11', fmt(contractLaborLine11));
console.log('continuingEducationOther', fmt(continuingEducationOther));
console.log('vehicleLine9 (hearse 72,000 + van Y1 20,300)', fmt(vehicleLine9));
console.log('partIIExpenses (Line 28)', fmt(partIIExpenses));
console.log('netProfit (Line 31)', fmt(netProfit));
console.log('seTaxable (92.35%)', fmt(seTaxable));
console.log('seTax total', fmt(seTax));
console.log('halfSeTaxDeduction', fmt(halfSeTaxDeduction));
console.log('QBI', fmt(qbi));
console.log('taxableIncomeBeforeQBI', fmt(taxableIncomeBeforeQBI));
console.log('tentativeQbiDeduction (20% of QBI)', fmt(tentativeQbiDeduction));
console.log('taxableIncomeCap (20% of TI before QBI)', fmt(taxableIncomeCap));
console.log('qbiDeductionAllowed', fmt(qbiDeductionAllowed));
console.log('gap vs naive 20%-of-QBI figure', fmt(tentativeQbiDeduction - qbiDeductionAllowed));
console.log('finalTaxableIncome', fmt(finalTaxableIncome));
"

Output:

serviceRevenue (95 cases x $2,400) 228,000.00
merchandiseRevenue (75% markup on $42,000 wholesale) 73,500.00
grossReceipts (Line 1) 301,500.00
suppliesLine22 49,250.00
liabilityInsuranceLine15 3,400.00
taxesAndLicensesLine23 750.00
advertisingLine8 2,200.00
contractLaborLine11 4,200.00
continuingEducationOther 1,100.00
vehicleLine9 (hearse 72,000 + van Y1 20,300) 92,300.00
partIIExpenses (Line 28) 153,200.00
netProfit (Line 31) 148,300.00
seTaxable (92.35%) 136,955.05
seTax total 20,954.12
halfSeTaxDeduction 10,477.06
QBI 137,822.94
taxableIncomeBeforeQBI 121,722.94
tentativeQbiDeduction (20% of QBI) 27,564.59
taxableIncomeCap (20% of TI before QBI) 24,344.59
qbiDeductionAllowed 24,344.59
gap vs naive 20%-of-QBI figure 3,220.00
finalTaxableIncome 97,378.35

Gross receipts of $301,500.00 blend $228,000.00 of pure service revenue with $73,500.00 of marked-up merchandise sales — the second figure only exists because this trade genuinely carries retail inventory, unlike most self-employed service trades in this corpus. That $42,000.00 of wholesale merchandise cost never runs through a formal Part III computation; it's deducted directly on Line 22 under the §471(c) small-business exception. The $92,300.00 vehicle deduction tells the whole story of this guide's central mechanic in one line: $72,000.00 of it is the hearse, fully expensed in year one with no cap, and $20,300.00 is as much of the $38,000.00 removal van as Rev. Proc. 2026-15's cap allows this year — the remaining $17,700.00 becomes §280F(a)(1)(B) unrecovered basis that trickles back in pieces over several more tax years (see the removal-van recovery schedule above), not as a lump sum next year.

On the QBI side: half the self-employment tax deduction ($10,477.06) brings qualified business income to $137,822.94. Subtracting the $16,100.00 standard deduction puts taxable income before the QBI deduction at $121,722.94 — comfortably under the $201,750 single threshold, so the W-2-wage/property cap doesn't engage (and, since this isn't an SSTB in the first place, no phase-out question even arises). A naive "20% of QBI" calculation would claim $27,564.59. But the 20%-of-taxable-income cap is only $24,344.59 — short of the naive figure by exactly $3,220.00, which is 20% of the $16,100.00 standard deduction: a structural consequence of taking the standard deduction with no other above-the-line deductions, not a quirk of this practice's specific numbers. The §199A(i) minimum floor of $400 is irrelevant here, since $24,344.59 clears it by a wide margin. The allowed QBI deduction is $24,344.59. Final taxable income: $97,378.35, which falls inside the 2026 single 22% bracket ($50,400–$105,700, per Rev. Proc. 2025-32).

Common Mistakes to Avoid

1. Running casket and urn purchases through a full formal Part III inventory computation when the §471(c) small-business exception applies. Most solo and small operations are nowhere near the $32,000,000 gross-receipts threshold and can deduct merchandise cost as sold, on Line 22, with far less bookkeeping overhead.
2. Assuming the removal van gets the same automatic treatment as the hearse. Only a vehicle "used as such" as a hearse is on the enumerated qualified-nonpersonal-use-vehicle list. An unmarked removal van — unmarked for good reasons specific to this trade — generally fails the harder four-factor modification test that applies to ordinary vans.
3. Treating "I have irregular hours and no desk job" as equivalent to "no fixed place of business." A funeral home is a fixed, regular place of business under Publication 463's commuting rule regardless of how unpredictable the schedule is — the home-to-office mileage exception some mobile trades in this corpus rely on doesn't open up here.
4. Deducting mortuary school tuition or apprenticeship costs. Both are nondeductible under Treas. Reg. §1.162-5(b)(2) and (b)(3) as education that qualifies you for the trade in the first place — and because they're personal expenses incurred before the business exists, they never belong on a Schedule C at all.
5. Assuming funeral service is an SSTB because it's a licensed, client-facing profession. It fails every category in Treas. Reg. §1.199A-5(b)(1), including the narrow reputation-or-skill catch-all — but don't stop there, since the 20%-of-taxable-income cap still applies regardless and is usually what actually limits the deduction.
6. Skipping the July 1 mileage-rate split on whichever vehicle uses the standard mileage rate instead of depreciation. A full year at a single annual rate understates the deduction for every mile driven after the increase.
7. Electing a depreciation method on a vehicle without checking whether it closes the mileage door. Rev. Proc. 2019-46 §4.05(3) makes a §179 or bonus-depreciation election permanent for that specific vehicle — run the comparison before filing, not after.

The defense in every case is the same: tag the category at the moment of the transaction — merchandise cost at the point of sale, a removal trip versus an ordinary commute, continuing education versus licensing education — rather than reconstructing a year of casework from memory in April, and keep records for the period the IRS expects.

How CentSense Helps

CentSense tags every merchandise invoice, insurance premium, and removal-trip mile to the right Schedule C line the moment you capture it:

• Scan casket/urn invoices, license renewal receipts, and liability-insurance premiums with AI, tagged to the correct line instead of a generic "supplies" bucket
• Log removal-trip miles separately from an ordinary commute, with the two 2026 half-year rates applied to the correct halves of the log for whichever vehicle doesn't use depreciation
• Separate service-fee revenue from marked-up merchandise sales throughout the year, so gross receipts and the materials-and-supplies deduction reconcile cleanly at filing time
• Flag state license and establishment-fee renewals for Line 23, separate from ordinary supplies
• Export a CPA-ready category breakdown as CSV when the return is due

For closely related mechanics, see Qualified Nonpersonal Use Vehicles: How a Modified Cargo Van Escapes the Luxury-Auto Caps, Large-Animal Veterinarian Tax Deductions, Dental Hygienist Tax Deductions, and The QBI Deduction for Freelancers.

Authoritative References

• IRS — About Schedule C (Form 1040)
• IRS — Standard mileage rates (2026: $0.725/mi Jan 1–Jun 30 per IR-2025-128; $0.76/mi Jul 1–Dec 31 per IR-2026-29)
• IRS — Publication 463, Travel, Gift, and Car Expenses
• IRS — Notice 2015-82 (de minimis safe harbor raised to $2,500 for taxpayers without an applicable financial statement)
• IRS — Rev. Proc. 2025-32 (2026 inflation adjustments: standard deduction, tax brackets, §199A SSTB thresholds, §448(c)/§471(c) gross-receipts threshold, §179 limits)
• IRS — Rev. Proc. 2026-15 (2026 passenger automobile depreciation limits)
• 26 U.S.C. §471 — General rule for inventories, including the §471(c) small-business exception (Cornell LII)
• 26 U.S.C. §274 — Disallowance of certain entertainment, etc., expenses, including §274(i)'s definition of "qualified nonpersonal use vehicle" (Cornell LII)
• 26 CFR §1.274-5 — Substantiation requirements, including the §1.274-5(k)(2)(ii) enumerated list naming hearses and the §1.274-5(k)(8) truck-and-van test (Cornell LII)
• 26 CFR §1.280F-6 — Special rules and definitions, including the §1.280F-6(c)(3)(i) hearse/ambulance exclusion from "passenger automobile" (Cornell LII)
• 26 U.S.C. §199A — Qualified business income, including the new §199A(i) minimum deduction (Cornell LII)
• 26 CFR §1.199A-5 — Specified service trades or businesses, including the health, consulting, and reputation-or-skill definitions (Cornell LII)
• 26 CFR §1.162-5 — Expenses for education, including the minimum-educational-requirements and new-trade-or-business nondeductibility rules (Cornell LII)
• 29 CFR §1910.1030 — Bloodborne pathogens (Cornell LII)
• Public Law 119-21 (One Big Beautiful Bill Act), §70433 — Increase in information-reporting threshold to $2,000, effective for payments made after December 31, 2025 (GovInfo)

Stop guessing whether this week's removal trip was deductible mileage or an ordinary commute, or whether last month's casket invoice belongs on this year's return. Start a free CentSense account, scan every merchandise invoice, insurance premium, and license renewal with AI the day it arrives, log removal-trip miles at the correct half-year rate, and export a CPA-ready Schedule C breakdown at tax time. The free tier includes 10 AI receipt scans a month, no credit card required, and the Solo plan is $5/month for unlimited scans, mileage tracking, and a CPA-ready CSV export. Start free →

This guide is general education for U.S. self-employed funeral directors and embalmers filing a Schedule C in 2026. It is not personalized tax advice, and it is not a substitute for state-specific funeral-licensing guidance, a worker-classification determination, or a written opinion on your own §199A, inventory-accounting, or vehicle-classification facts, which a CPA or EA should confirm based on your full situation.