Life ins
- Thread starter desertrat
- Start date
itsbob
I bowl overhand
From other threads:
There currently is no estate tax for 2010.. years prior it was tax free up to 3M. 2011 they may reinstate and reinstate back to prior levels of somwhere in the 1M range AND they are trying to grandfather so they can go back and collect taxes from 2010.
I would THINK (and I have no basis in fact) that if you invest the money, or make interest on that money that the proceeds from that investment would not be tax free.
There was also an issue on here about the accounts provided by the insurance company you may want to read.
desertrat
0_0
itsbob
I bowl overhand
From the IRS website:
The interest on your life insurance dividends is taxable in the tax year it is credited to your account and must be reported on your tax return if you can withdraw it in that tax year. However, if you can only withdraw the life insurance interest on the anniversary date of the life insurance policy (or other specified date), the life insurance interest is taxable and must be reported on your tax return in the tax year in which that date occurs.
Life insurance dividends are not taxable and you should not report them on your tax return.
If life insurance death benefits are paid to you in a lump sum or other than at regular intervals, include the life insurance death benefits in your gross income on your tax return only to the extent the life insurance death benefits are more than the amount payable to you at the time of the insured person’s death. In other words, if the life insurance death benefit is $50,000 and you receive $50,100 the $100.00 is taxable interest and you must report it on your tax return. The $50,000 in life insurance death benefits is generally tax free and you do not report it on your tax return. In other words, if the life insurance death benefit is $50,000 and you receive $50,000, there is no taxable interest and thus nothing to report on your tax return.
If you receive life insurance proceeds in installments you can exclude a part of each life insurance installment from your taxable income on your tax return because it includes both life insurance death benefits and life insurance interest. Divide the life insurance death benefits of the policy by the number of years payments are to be received. That's the amount that is tax free each year.
You must give the payer of your interest income your correct social security number. If you do not, you may be subject to a tax penalty and to back-up tax withholding. For more information see "What is Form W-9 and backup tax withholding?"
Interest has be reported, but not the actual proceeds from the life insurance.
The interest on your life insurance dividends is taxable in the tax year it is credited to your account and must be reported on your tax return if you can withdraw it in that tax year. However, if you can only withdraw the life insurance interest on the anniversary date of the life insurance policy (or other specified date), the life insurance interest is taxable and must be reported on your tax return in the tax year in which that date occurs.
Life insurance dividends are not taxable and you should not report them on your tax return.
If life insurance death benefits are paid to you in a lump sum or other than at regular intervals, include the life insurance death benefits in your gross income on your tax return only to the extent the life insurance death benefits are more than the amount payable to you at the time of the insured person’s death. In other words, if the life insurance death benefit is $50,000 and you receive $50,100 the $100.00 is taxable interest and you must report it on your tax return. The $50,000 in life insurance death benefits is generally tax free and you do not report it on your tax return. In other words, if the life insurance death benefit is $50,000 and you receive $50,000, there is no taxable interest and thus nothing to report on your tax return.
If you receive life insurance proceeds in installments you can exclude a part of each life insurance installment from your taxable income on your tax return because it includes both life insurance death benefits and life insurance interest. Divide the life insurance death benefits of the policy by the number of years payments are to be received. That's the amount that is tax free each year.
You must give the payer of your interest income your correct social security number. If you do not, you may be subject to a tax penalty and to back-up tax withholding. For more information see "What is Form W-9 and backup tax withholding?"
Interest has be reported, but not the actual proceeds from the life insurance.
MMDad
Lem Putt
Internal Revenue Service enter 559 in search box. The first result should be pub 559. That covers most tax topics related to your loss.
desertrat
0_0
Thanks, I'll be getting a good tax person this year.
ProfMoneyWise
Member
Insurance
The proceeds from a decedent's life insurance policy paid by reason of his or her death generally are excluded from income. The exclusion applies to any beneficiary, whether a family member or other individual, a corporation, or a partnership.
Above is from Publication 559, Internal Revenue Service
Specifically: Publication 559 (2009), Survivors, Executors, and Administrators
And I am sorry for your loss. I do not know you nor did I know your wife but being forum members I do feel a familiarity. Peace.