Life Insurance Policy Surrender Settlement

[randyw57]

My wife 'cashed in' a life insurance policy her parents had for her in 2020.

She received a check and a 'Statement of Policy Surrender Settlement'.

The Statement includes this information:

1. '... law requires us to tell you that the amount paid from the policy in excess of the investment in the policy is taxable as income.'.

2. 'We are not required to send a 1099-R to you or the IRS'.

The amount of the check does include a gain over what was invested in the policy. This is from 'Dividend Additions' and 'Terminal Dividends'.

The Statement indicates a portion of the check is taxable. Assuming that is correct, how do I go about entering this into TurboTax. 

Thanks for any help or advice!

[AmyC · Accepted solution]

Cash received greater than the cost of the policy is taxable.

Cost is the total premiums paid for the policy minus any refunded premiums, rebates, dividends, or unrepaid loans that were not included in income. For guidance, see Revenue Ruling 2009-13

To enter the income, follow the steps here.

[randyw57]

Thanks, AmyC!

That is exactly what I needed.