1099 R

[Taxhelp42]

• I received a 1099-R for a whole life insurance policy that my estranged father apparently took out when I was 2 years old, I never knew this policy existed, I have never contributed to it or received any benefits from it. Since the premiums were not being paid, the policy apparently went into a loan status and closed once the loan exceeded the cash value to which I am now being taxed for loan forgiveness as income apparently. Can I dispute this situation as again I will state I have never contributed or received any funds from this whole life insurance policy that was taken out when I was a toddler? 

[DavidD66]

If a whole life policy lapsed with no cash value and it resulted in taxable income being reported, it means the policy had an outstanding loan.  If you received the Form 1099-R then you were the owner of the policy.  If you were the owner of the policy then no one else should have been able to take out a loan on the policy.  You need to contact the insurance company.   Your only recourse is to go to the insurance company and try to have a corrected Form 1099-R issued with zero taxable income.  You can't dispute this on your tax return.  If you can't get the insurance company to issue a corrected Form 1099-R you will have to report the income on your tax return.

[Taxhelp42]

The ownership apparently automatically changed to me when I turned 21, per the life insurance co. Again, I didnt know this existed until receiving the 1099R, have never contributed or received a distribution, and have not spoken to my "father" in at least 30 years. 

So just because I am the "owner" of this whole life policy I can be taxed? How is that legal when I was just 2 years old when he opened it and obviously never agreed to or signed anything. 

[AmyC]

Depending on the amount, it may be worth talking to a lawyer. Unfortunately, a 1099-R with your name on it means taxable income. These accounts do turn over for adulthood - it is meant to be a gift, not a consequence.