Is a life insurance policy pay-out tax free?
Is a life insurance policy pay-out tax free?
An employee at our company received a life insurance pay-out when his spouse died. Does he have to pay taxes on the amount he received.
Previously I had heard that you did not have to pay taxes on a pay-out from a life insurance policy when someone in my family passed away.
Thanks
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5 Responses
2.1.2010
Best Answer – Chosen by Voters Life insurance pay-out on a spouse is not taxed. Source(s): My husband died recently.
2.1.2010
I may not be of much help. Me and my husband are in the process of possibly obtaining a whole-life cash value plan (or something like that). Anyways I do remember them telling us that the cash accumulation payout from it (its like a forced savings AND a life insurance policy) or if we every cashed out the money is completely tax-free. So I think that the actual life insurance payout would also be tax free. However, I am no expert and that might be for this plan, as I don't know what plan your employee had. Hope someone comes along with a bit more knowledge than me.
2.1.2010
Just like every tax question, it depends.Generally though, the amount received will be tax-free. Source(s): http://www.irs.gov/faqs/faq-kw95.html
2.1.2010
Life insurance proceeds are not taxable. Nor are they part of the deceased's estate. So they don't even show up on the tax return.
2.1.2010
Generally it's tax free.