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Life insurance proceeds are generally not taxable. Did you receive a 1099-R for it, or any interest on it?
A life insurance payout to the beneficiary of a deceased person isn't reportable on any tax return. However, any earnings that may have accumulated after the insured passed away, may be taxable to the beneficiary recipient. If they are, then you would have received some type of tax reporting document for that. Usually a 1099-R, but could be a 1099-INT or something else, depending on the specific type of policy the insured had.
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