I cashed out a life insurance policy this year, the taxable income amount was withheld. Do I need to report this as income, if the amount is already withheld?

[ariasimps]

I had 10k taxable income, 1k was withheld. I don't want to pay taxes on it twice

[Carl]

Generally, when  you cash out a whole life policy there is no way you will get back more than you paid in to the policy. Additionally, you paid all those premiums with dollars which you already paid taxes on in the year the premiums were paid. So there's nothing to report. But of course, never say never.

Some whole life policies have dividends or other earnings that accumulate over time. When you cash out the policy the cash out will include those earnings, which are taxable income to the recipient. In such a case the insurance company will issue a tax reporting document (usually a 1099-R) to the recipient which then has to be reported on the recipient's tax return.

So if you did not get a tax reporting document concerning your cash out, you have nothing taxable or reportable to include on  your tax return.

[Phanmus]

 As a senior,  I cashed out three insurance policies receiving only about $2,000.   I have borrowed from them several times over the past 15 years to help pay bills.  I have had the policies reduced by the insurance. companies each year as repayment of principal and interest on the policies.   Now they have now sent me 1099-R forms saying almost $50 was the gross distribution on the three policies.  Is this $50 K income I have to pay taxes on?

[macuser_22]

The taxable amount should be in box 2a.    Contact the issuer for an explanation.   Nobody here can know the terms of your policy.

[SusanY1]

Since you indicate that you had tax withheld, your insurance company should be sending you a 1099-R or similar statement so that you can reconcile these amounts on your tax return.

You should wait to file your tax return until you have this document.

If you do not have it by the middle of February, contact the insurance company and ask them to re-send it. 

This document will contain the information necessary to report the distribution on your tax return.  

The amount withheld was not likely the exact amount due on the distribution.  You may owe more, or you may even be due a refund!