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Level 2

Question

Life Insurance

8 replies
97 views

I had premium coming out for 2 Life Insurance policies pre-tax. I surrendered them both for their cash value due to job loss and needed the money. Taxes were not taken out at time of surrender. Do I need to report this? If so, how?

Alumni - Intuit

Life insurance policies that are cashed out (surrendered) aren't taxable up to the amount of the premiums and other contributions. Earnings on the policy above and beyond the amount invested are taxable.

Please read this TurboTax Help article for more information.

If there are earnings to be reported, this is how you enter them in TurboTax.

In TurboTax, open your tax return
Click on Federal in the left-hand column, then on Wages & Income
Locate the section Investments and Savings and click on the arrow on the right
Click Start next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
Answer Yes to the question: Did you sell any investments?
Answer No to the question: Did you receive a form 1099-B or brokerage statement?
Select Other from the list of investments.
Follow the TurboTax interview to enter your information.

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lylejtAuthor

Level 2

If the earnings were below the amount invested, can I count that as a loss? If so, how?

Alumni - Intuit

No, if your original investment was made through pretax deductions, you can't claim to have a basis in the policy.

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