Foreign Insurance Endowment payment

Forum|Forum|4 years ago
February 16, 2022
2 replies
31 views

My $10,000 life policy in Canada became paid up in 2021. I received a pure endowment payment of $3,110. From this payment 50% Canadian tax was deducted of $1,555.

I have always claimed the income from this insurance as arms length interest payments on my taxes.

My premiums over the years totaled $7,717.50

How do I claim the endowment on my 2021 taxes or do I claim it because I have paid tax on the interest over the years.

Best answer by DaveF1006

According to IRS publication 554, Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. In this case, your premiums of $7717.50 exceeded the payout amount of $3110 so this is not taxable income to you.

Since this is not taxable income, you cannot claim a foreign tax credit for the income taxes you paid to Canada on this endowment.

DaveF1006Answer

Level 15

Since this is not taxable income, you cannot claim a foreign tax credit for the income taxes you paid to Canada on this endowment.

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PattiD65Author

Level 2

DaveF1006 thank you for your reply. It's what I suspected and I wished that I could claim the foreign tax paid. But, oh well, at least I don't have to claim it as income.