I surrendered a life insurance policy. Dividends were added to the policies value each year ( per the amount as stated on a yearly 1099 int). I paid income taxe on those dividends each year.
After cashing in the policy I received a 1099R which appears to have made no allowance for the increase in value of the policy due to those dividends. Since I have paid taxes on those dividends, it appears I am being taxed twice.
Why is there no way to deduct the value of the dividends ( that have already had income tax paid on them) from the cash value (received)?
Contact the issuer for clarification and a corrected for if needed ... however those dividends probably paid part or all of the premiums instead of increasing the basis in the policy which is common.