She is a retired widower normally reports less than $30K income. With the surrendered income she is up to ~$60K and thus will owe ~$8k fed taxes.
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The surrender of a life insurance policy may result in a taxable gain, but not for the total amount of the cash value received.
If you surrender your cash value life insurance policy, any gain on the policy will be subject to federal (and possibly state) income tax. ... Your basis is the total premiums that you paid in cash, minus any policy dividends and tax-free withdrawals that you made.
If she has earned income and is younger than 70 1/2, she may contribute up to $6,500 to a Traditional IRA before April 18, 2017 and deduct the contribution from her taxable income.The surrender of a life insurance policy may result in a taxable gain, but not for the total amount of the cash value received.
If you surrender your cash value life insurance policy, any gain on the policy will be subject to federal (and possibly state) income tax. ... Your basis is the total premiums that you paid in cash, minus any policy dividends and tax-free withdrawals that you made.
If she has earned income and is younger than 70 1/2, she may contribute up to $6,500 to a Traditional IRA before April 18, 2017 and deduct the contribution from her taxable income.Still have questions?
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