I am the owner of the trust. I received a form (no form number indicated) which lists income: U.S. Govt Interest and Other Taxable Interest. Deductions: Fiduciary Fees. Capital Gains/Losses: 0.00
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When that is the (annual) case, you should receive a separate tax document from the insurance company (usually a Form 1099-DIV or 1099-INT) for inclusion on your annual personal income tax return. However, the principal value of the cashed-out policy would not be taxable; instead it would be considered a non-taxable return of capital, and hence, there would be nothing to report on your tax return.
Unless the form you received from your original life insurance company explicitly indicates that some amount is taxable income, then you don't have to report anything from that "cash out" action on your personal tax return.
When it comes to pre-need funeral trusts, the taxation is a little more involved. Still, there should be nothing that you, as an individual taxpayer, needs to report or file -- or on which you should have to pay personal income taxes.
When that is the (annual) case, you should receive a separate tax document from the insurance company (usually a Form 1099-DIV or 1099-INT) for inclusion on your annual personal income tax return. However, the principal value of the cashed-out policy would not be taxable; instead it would be considered a non-taxable return of capital, and hence, there would be nothing to report on your tax return.
Unless the form you received from your original life insurance company explicitly indicates that some amount is taxable income, then you don't have to report anything from that "cash out" action on your personal tax return.
When it comes to pre-need funeral trusts, the taxation is a little more involved. Still, there should be nothing that you, as an individual taxpayer, needs to report or file -- or on which you should have to pay personal income taxes.
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