Do i have to claim a life insurance policy cash out?

[ryanmesa]

I cashed out a life insurance policy do i have to claim it?

[bwa · Accepted solution]

If you cash in a life insurance policy you may have taxable income. The taxable income would be -

• the cash surrender value that you received (including any amount not received due to a loan on the policy), minus
• premiums paid over the life of the policy. On a mutual policy, premiums are net of participating dividends.

Generally, this only results in income on older policies. Your insurance company should send you a Form 1099-R for the income to report.

[hardee40]

What if i did not get 1099r

[khende]

We received a life insurance distribution and Turbo Tax is considering the full amount of the gross distribution as income though there is a taxable amount and taxes withheld listed in the 1099-R.  This doesn't see right?  

[JohnB5677]

Something does not seem correct.  

Please clarify what is on the 1099-R.

• Is there a value in both boxes 1 and 2a?
• What is the code in Box 7?

Also, please go through the interview, and if you are not sure of a question add it to your posting.

[khende]

Thank you for your prompt response 🙂 I figured it out!  Turbo Tax is adding the gross distribution to my total income, but is not calculating the full distribution within the taxable amount of our total income.  I was looking the federal review page and not the actual form.  Just to answer your questions yes there is a value in boxes 1 and 2 as well as federal income taxes were withheld.  Box 7 has code 7, normal distribution.