If you've cashed in your life insurance policy, then it's taxable to the extent that your earnings exceed your contributions.
You figure it like this:
Proceeds from cashed-in Life Insurance policy minus amount paid for the policy minus additional premiums paid by you.
You'll receive a 1099-INT or 1099-R from the insurance carrier, and depending on what it's reported on, it either goes on the interest line or the retirement income line.
Here's further information on Taxable and Nontaxable Income.
If you've cashed in your life insurance policy, then it's taxable to the extent that your earnings exceed your contributions.
You figure it like this:
Proceeds from cashed-in Life Insurance policy minus amount paid for the policy minus additional premiums paid by you.
You'll receive a 1099-INT or 1099-R from the insurance carrier, and depending on what it's reported on, it either goes on the interest line or the retirement income line.
Here's further information on Taxable and Nontaxable Income.
If the insurance company knows that that taxable amount is zero (because the amount distributed was less than the amount paid in), the insurance company is not required to issue a Form 1099-R and probably will not.
The 10099-R received from the Life Insurance company did not include all the premiums paid ( an existing Policy was cashed in to purchase a new policy & the Insurance company did not include the premiums paid for the original policy). My Broker was able to get the missing information. How do I inform IRS with this new information, as IRS already has the incorrect information they got with 1099-R form ?
The payments made for the original policy only transfer to the new policy if the old policy was moved to the new policy by a 1035 exchange. If the old policy was simply cashed out and the proceeds used to purchase a new policy, the premiums paid for the old policy were already applied to reduce the taxable amount of the proceeds of that cash-out. In that case, though, the entire amount of premiums paid for the new policy would be the nontaxable amount of the surrender of the new policy.
Assuming that the policy was properly moved by 1035 exchange, if the insurance company will not issue a corrected Form 1099-R, you can submit a substitute Form 1099-R (Form 4852) with the correct information and explanation of how you tried to get the insurance company to issue a corrected form and how you determined the correct taxable amount. In TurboTax you'll do this by marking the "I need to prepare a substitute 1099-R" box on the "Tell Us Which 1099-R You Have" page. Preparing a substitute Form 1099-R will require you to mail your tax return.