by hummingbird » Sun Jun 22, 2008 12:03 am
My mother in-law claims that after my father in-law passed away she received 50,000 from his life insurance. Now she claims she never paid life insurance taxes and the IRS is claiming she has to pay the taxes on that amount. I never knew life insurance was taxable. IS it? :?
Posted: Tue Jun 24, 2008 08:50 am Post Subject:
From the Gubment's lips (their web page) to your ears (through your eyeballs) if one can read....
Source LINK.
Are proceeds paid under a life insurance contract taxable and do they have to be reported as income?
Generally, if you receive the proceeds under a life insurance contract because of the death of the insured person the benefits are not taxable income and do not have to be reported. Any interest you receive would be taxable and would need to be reported just like any other interest received.
However, if the policy was transferred to you for valuable consideration, the exclusion for the proceeds is limited to the sum of the consideration you paid, additional premiums you paid, and certain other amounts. There are some exceptions to this rule. For additional information, see Publication 525, Taxable and Nontaxable Income.
@ Lori...there are many, many, many UN-natural persons... :shock:
Amendment to my post above...read the wrong section...
A pledge or assignment of a life insurance policy as collateral security for a loan or other obligation owed by the policy owner is NOT a transfer for valuable consideration.
See THIS
Posted: Tue Jun 24, 2008 09:53 am Post Subject:
Lori...there are many, many, many UN-natural persons...
Ya' know I hear tell, that in Cal-a-for-n-I-A, nearly every other girl is like that! :shock: ... :wink:Posted: Tue Jun 24, 2008 10:54 am Post Subject: insurance
Thanks for the clarification, 'INVESTIGATOR'. That DOES clear up a few things for me. Makes sense.
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