The amount you paid for the life insurance would not be taxable if you are the insured. However, if there are earnings on those distributions that have never been taxed then you would have a taxable amount that must be included in your income.
IRS Interview Tool will assist you in your situation (click the link to begin after you see the details). Gather the requested information below.
- If you are the policy holder who surrendered the life insurance policy for cash,
- if the amount you received is more than the cost of the policy
- If you are the beneficiary,
- the face amount of the policy, if specified in the policy
- if you are receiving the proceeds in installments, whether there is a refund or period-certain guarantee
- If federal income tax was withheld from the life insurance proceeds
Please update if you have more questions.
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