Receipts payments - Payment from Life Insurance Corporation of India & Public Provident Fund - PPF (India)

[postbox_shashank]

Hi Turbotax gurus,

I have LIC policies in India. This policy is active and premium is paid every year. The amount is received from LIC every four years. Link for policy details -

https://licindia.in/Products/Withdrawn-Plans/New-Bima-Gold.aspx

Is it taxable income?

My PPF matured in India after 15 years. I read in one of the community that it is not taxable. Is this understanding correct?

Please confirm. This response is required to file taxes ASAP. 

Thanks,

Shashank 

[Vanessa A]

It depends, but the link looks like it is probably not taxable.  It appears to be just a return of your premiums paid.

If you are a US Citizen or Resident and filing a form 1040 not a 1040NR, then life insurance withdrawals are not taxable to the point that you paid in.  

If you contributed $10,000 and are only getting $8,000 back,  since your contribution is higher than the amount you are getting back, this would not be taxable income.  However, if you paid in $5,000 throughout the years, but you received $8,000, then $3,000 would be taxable (5,000-8,000). 

Any earnings you receive on the contributions are taxable. 

The small amount of information in that link, looks like it is a return of money you paid in, but you would need to contact the company to be sure there is not interest or other earnings included in the payments you are receiving. 

If you are not a US Citizen or Resident for tax purposes, then you would need to contact Sprintax.com to file a 1040NR and for information on the taxability of this payment

[postbox_shashank]

Let me clarify point by point here. As of now, my understanding is that it is not taxable. Let me expand here - 

1. This is a joint return for year 2022. The form is 1040 in my case. 

2. For LIC, the policy started in year 2010. I am paying these premiums on yearly basis but they are redeeming some amount every fourth year. Best of my understanding, this is not taxable. 

3. For Public provident fund, I started putting money in year 2005. This comes in with a life of 15 years. We put some money every year and get matured after 15 years. This amount matured recently. Best of my understanding, this is not taxable. 

4. I have a residential property in India which started giving rent to me on every month. I got this apartment renovated (Paint/clean-up) etc this year. May I know if we need to show this as an income? If yes, I need to show the maintenance charges as well as a claim. May i know if this needs to be shown in the return?

Please confirm. 

Thanks,

[RobertB4444]

To the first two, as @VanessaA says, a return of money you paid in is never taxable.  As far as the rental home it is absolutely taxable.  Enter the information on it into rental real estate and the system will walk you through entering your earnings and your expenses.

@postbox_shashank 

[TaxTalk23]

Thank you so much @Vanessa A 

I have a follow up question to the example:

---

@Vanessa A wrote:

However, if you paid in $5,000 throughout the years, but you received $8,000, then $3,000 would be taxable (5,000-8,000). 

Any earnings you receive on the contributions are taxable. 

How to report this $3000 in Turbo Tax 2022 Premier?  (i.e., Is it considered miscellaneous income? or interest? or dividend? How shall this be reported)?

Greatly appreciate your help.

[valleybuy]

I have similar question, I have Indian ICICI Prudential Pension fund since 2004 and paid term insurance premium for 5  years and now its maturing and its value is 5 times I have option to surrender in maturity or postpone it by few years or convert to annuity.

if I surrrender do I pay US taxes on difference and do I need to fill form 8621 PFIC for passive foreign funds or other income tax is sufficient

thanks in advance, appreciate your inputs as I need to inform the pension fund

fyi @RobertB4444 @Vanessa A @postbox_shashank