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mminecci
New Member

I received life insurance proceeds, and they took out taxes?

The executor of the estate had the IRS and state take out taxes..how do we get that money back? According to the IRS website, lump sum payments to a beneficiary are not taxable. HELP!! It was 1/4 of the benefit.
1 Best answer

Accepted Solutions
MichaelL1
Level 15

I received life insurance proceeds, and they took out taxes?

OK, I am assuming this was then life insurance and not an annuity.  As an insurance annuity contract can be taxable and a 1099R would be issued.

You did not say if you got a 1099 for this or not. I am assuming - no.

You do not report life insurance as income on the return. 

So to get credit for the payment made, you will:

Go to Federal Taxes, 

Deductions & Credits,

Estimates &Other Taxes Paid, 

then to Other Income Taxes, 

Then to Other income Taxes Paid in 2016, 

and you would have to open"Withholding not already entered on a W-2 or 1099", and under Federal and State you would enter the amount and then the drop down you would enter state two digit ID.  

This is how you would get the credit for the Federal & State tax withheld.  

I am making some assumptions, so if this is not correct, please post a comment and I will help you.  Thank you.

View solution in original post

2 Replies
MichaelL1
Level 15

I received life insurance proceeds, and they took out taxes?

OK, I am assuming this was then life insurance and not an annuity.  As an insurance annuity contract can be taxable and a 1099R would be issued.

You did not say if you got a 1099 for this or not. I am assuming - no.

You do not report life insurance as income on the return. 

So to get credit for the payment made, you will:

Go to Federal Taxes, 

Deductions & Credits,

Estimates &Other Taxes Paid, 

then to Other Income Taxes, 

Then to Other income Taxes Paid in 2016, 

and you would have to open"Withholding not already entered on a W-2 or 1099", and under Federal and State you would enter the amount and then the drop down you would enter state two digit ID.  

This is how you would get the credit for the Federal & State tax withheld.  

I am making some assumptions, so if this is not correct, please post a comment and I will help you.  Thank you.

View solution in original post

mminecci
New Member

I received life insurance proceeds, and they took out taxes?

THANK YOU, THANK YOU!! You are amazing. That is exactly what we needed!
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