Hello, I have a question I hope I can get an answer to. My mother unfortunately passed away last year, and one of the things we had to deal with was a life insurance policy, worth about $28,000, that was split evenly between my two sisters and myself.
In preparing taxes this year (I had to file an extension), I received a Form 1099R from the Life Insurance company, stating that my gross distribution for this was $9,622.
My question is how do I put that into TurboTax? The Life Insurance company did not take out any Federal income tax withhold, since they couldn't know what my income tax bracket was going to be. When I just enter it directly as a 1099R, TurboTax thinks that I've taken money directly out of a retirement fund, and changes my refund a significant amount. This doesn't seem right to me, as I was told that anything that my mother left to us (up to a certain dollar amount, which we didn't even come close to), was considered an inheritance, which isn't taxed. I would think a Life Insurance fund would fall under that, as well, but again it seems that when I enter it, my refund shrinks to almost nothing.