Life insurance

Linecutter — Mon, 27 Jan 2020 18:38:08 GMT

I have cancelled my life insurance and received a check for it's surrender value. Do I have to declare this as income and do i have to pay taxes on this amount.

Re: Life insurance

HelenC12 — Mon, 27 Jan 2020 19:06:38 GMT

Generally, when you cash out a whole life policy, there is nothing to report since the premiums paid over the life of your policy will generally be greater than your cash out. Also, you paid all those insurance premiums with after tax dollars, so there's nothing to report.

However, if you have dividends or other earnings that accumulate over time, they may be taxable.

When you cash out the policy the cash may include earnings, which are taxable income to you.
The insurance company will issue a tax reporting document (usually a 1099-R) to you which then has to be reported on your tax return. See Where do I enter my 1099-R?
If you didn't get a tax reporting document concerning your cash out, you have nothing taxable or reportable to include on your tax return.
For additional information, see Publication 525, Taxable and Nontaxable Income.

Additional mention: Super Carl

topic Life insurance in Retirement tax questions

Life insurance

Re: Life insurance