No, TurboTax put the money that your money earned as retirement income.
The form you received says that over the years you deposited a total of $42,000 into your life insurance account. That's what the company has tracked.
You already paid tax on that 42 grand. You don't have to pay tax again.
While it was in the life insurance account (which is NOT a savings account) the 42 grand that you had there EARNED 9 grand in interest. You have never paid taxes on that 9 grand. It was just sitting in the account, growing.
Since you took the money out now it is time to pay taxes on the money that was earned, that you did not pay taxes on before.
So 9 grand is getting added to your income. The 42 grand that you and your wife put in is not getting added to your income because you already paid taxes on it and you do not have to pay taxes on it again.
As @ThomasM125 says above, if you had waited til after your wife died to take the money out it would not have been taxed at all. That's what makes this different than a savings account.
@Rodstaxes1
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
