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Yes, if the 1099-R is in your name then you will have to include the 1099-R on your tax return:
If you received a 1099-R for it...Yes.
The major part of the $$ are not usually Federally taxable, but many times the policy accrued dividends between the date of death and when the $$ were distributed.....and those earnings are subject to taxes. But it's all usually handled cleanly in the boxes on the 1099-R. States would also tax those same earnings.....I personally don't know if any states would tax the main part....some states do tax inheritance $$, but don't know if that includes insurance $$. BUT, putting in the 1099-R data, along with the box 7 code, would ID the source of the funds and the state software would handle it appropriately.
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