Where do I report federal gain on surrender of a life insurance policy?

[jerry2000 · Accepted solution]

You will receive a Form 1099-R reporting that surrender to you. The company has to have that in the mail to you by Jan. 31. Wait until you get it and then you enter it at
Federal Taxes
Wages & Income
choose I'll choose what I work on
Retirement Plans and Social Security
IRA, 401k, Mutual Funds, 1099-R

[lois_fritsche]

What if I don't get a 1099 from them?

[jerry2000]

Call them and ask them for it.

[djewett27]

They say they weren't required to send a 1099 since the policy was issued before 1982.

[cw11]

i have the 1099R and it shows all monies as taxable

[Another7Blessing]

How do you report the cash surrender value of life insurance policy on the 1040 tax form?

What information is entered in which required blocks?

[DianeW777]

It depends. If you have received your Form 1099-R and they have only the earnings in box 2a (taxable amount) you will enter your form exactly as it appears.  However, if they checked the box in 2b 'Taxable amount not determined', then you will need to find out from your records or the life insurance company how much of the distribution is your earnings.  

If you purchased the life insurance with your after-tax dollars the amount you contributed or paid for the policy would not be taxable when you cashed it in.

• Where do I enter my 1099-R?

@Another7Blessing

[GoingSmart]

Where do I enter the cost basis for the life insurance policy that I cashed in? The cost over many ears is almost as much as the surrender value which lowers the revenue reported on the 1099R by quite a lot.

[DaveF1006]

The best method to account for the cost basis is to. 

1. Calculate the amount of the basis accumulated over the years.
2. Subtract this from the gross distribution on line 1 and then report the remainder as taxable income in Box 2A of the 1099R. The remainder represents taxable earnings that needs to be reported as income.