Surrendered Life Insurance in 2025

Forum|Forum|4 months ago
January 28, 2026
2 replies
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Surrendered Life Insurance Policy in 2025 and recieved statement showing breakdown of the surrender value:

Gross policy value: $8,506.00

Plus Dividends on depoosit (Accum): $2,208.82

Plus settlrment Dividend: $382.82

Loan Balance: $0.00

Net Cash Surrender Value: $11,097.13

Less unpaid premium: $13.12

Federal and State tax: $0.00

Payment Amount: $11,084.01 (I received a check for this amount)

Another form shows Total Premiums Received: $12,052.78

Questions:

Should I receive a 1099-R?

Should I receive a 1099-DIV?

I also took a dividend cash withdrawal about 30 years ago. Should that have reduced the cost basis at that time 30 years ago and I paid the taxes on this. Will this even 30 years ago effect the current surrender values?

The Insurance company tells me I may not get a 1099-R but they are not sure if I will get one or not get one. They say it looks like no taxes would be due thus no 1099-R needs to be included in tax return. are they correct?

Thanks in advance....

Best answer by MaryK4

Yes, you should receive a 1099-R. "Payments of reportable death benefits in accordance with final regulations published under section 6050Y must be reported on Form 1099-R." (Instructions for Forms 1099-R and 5498 (2025))

No, you should not receive a 1099-DIV. When you took the dividend cash withdrawal it should have reduced your basis so it was not a taxable event at that time. It is also most likely why you do not have a taxable gain today.

You do not have a taxable amount, but it is important that you report the transaction. You should wait for a 1099-R (which are due January 31st so it should arrive very soon). If you do not receive one, you can still report it in TurboTax with a Form 4852 (Substitute Form). Please post again if you do not have it in about a week and ask for the steps for a Substitute 1099-R.

MaryK4Answer

Level 15

Yes, you should receive a 1099-R. "Payments of reportable death benefits in accordance with final regulations published under section 6050Y must be reported on Form 1099-R." (Instructions for Forms 1099-R and 5498 (2025))

No, you should not receive a 1099-DIV. When you took the dividend cash withdrawal it should have reduced your basis so it was not a taxable event at that time. It is also most likely why you do not have a taxable gain today.

You do not have a taxable amount, but it is important that you report the transaction. You should wait for a 1099-R (which are due January 31st so it should arrive very soon). If you do not receive one, you can still report it in TurboTax with a Form 4852 (Substitute Form). Please post again if you do not have it in about a week and ask for the steps for a Substitute 1099-R.

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1

1997retirdAuthor

Level 3

I found an IRS Link that may be helpful to others on many subjects.

https://www.irs.gov/help/ita

From that link I searched: Are Life Insurance proceeds I received taxable?

And got this link:

https://www.irs.gov/help/ita/are-the-life-insurance-proceeds-i-received-taxable

Nice tool…. Just answer the questions

D

dmertz

Level 15

If the insurance company knows that the distribution is nontaxable, they have the option not to send you any Form 1099-R, so nothing to report on your tax return in this case.

1

1997retirdAuthor

Level 3

@dmertz .... Can you point me to the IRS document that says the insurance company has an option?

D

dmertz

Level 15

Page 2 of the Instructions for Form s 1099-R and 5498 (https://www.irs.gov/pub/irs-pdf/i1099r.pdf😞

Life insurance, annuity, and endowment contracts.
Report payments of matured or redeemed annuity,
endowment, and life insurance contracts. However, you do
not need to file Form 1099-R to report the surrender of a
life insurance contract if it is reasonable to believe that
none of the payment is includible in the income of the
recipient.