It depends on what the death benefit check is for.
If the check represents proceeds from life insurance because of the death of the injured person - the check is not taxable nor reported on your tax return. Note that if
the insurance proceeds were delayed, there may be taxable interest on the
non-taxable insurance proceeds... you would then receive 1099-INT if you have
taxable interest in the proceeds which should be reported. Form 1099-INT is entered as follows:
- Federal Taxes
- Wages and Income
- Interest and Dividends, select Interest on
1099-INT
If the check is received as part of a financial arrangement before the insured's death, it is taxable. You would receive form 1099-R, data entry is below.
If the check is a death benefit for any retirement plan from the deceased, then it may be taxable, fully or partially. You would report form 1099-R (which you should receive) for any death benefit from deceased retirement, such as 401K, IRA, etc. Form 1099-R is entered as follows:
- Federal Taxes
- Wages and Income
- Scroll down to Retirement
Plans and Social Security
- Select IRA, 401(k), Pension Plans (1099-R)
