Are the proceeds from a life insurance policy taxable?
Are the proceeds from a life insurance policy taxable?
I recently found out that my aunt who passed away had named me as the beneficiary on her life insurance policy, is this income taxable?
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6 Responses
2.1.2010
Best Answer – Chosen by Voters No federal tax. You'll have to check for your state. The above poster is wrong about estate size. Life insurance benefits are paid directly to the named beneficiary. They do not become part of the estate to be probated.
2.1.2010
It may be. It depends on the size of her estate. In most instances, for those who are middle class or below (sorry, that sounds wrong but I wasn't sure how else to say it), life insurance death benefits are not taxable.Edit: I want to clarify because some posters don't seem to be aware of new state laws (life insurance is governed by the states, not the federal government) regarding taxation of benefits. The Democrats have gone after the long-standing non-taxed life insurance proceeds and MANY states have brand new laws on the books to tax some proceeds. People need to start reading!!
2.1.2010
If you are the beneficiary on a life insurance policy you will not have to pay income taxes on the death benefit you receive from the insurance company. Any interest that it earned while with the insurance company or after you get it will be taxable. Source(s): I've worked in the life insurance industry for 10 years as an actuary.My blog: http://gardenstatelifeinsurance.blogspot…
2.1.2010
No. That's the beauty of life insurance.If you are the beneficiary and everything is in order, subit a copy of the death cert and you should have the proceeds in a week.As far as taxes, you don't even mention it on your return
2.1.2010
It depends on her country of domicile/residence. You'd do better asking this under "Taxes".
2.1.2010
probably not, but check your local tax laws.