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rabia55
New Member

Where I have to enter the amount which was given to me by insurance company on the death of my husband?

 
3 Replies
Opus 17
Level 15

Where I have to enter the amount which was given to me by insurance company on the death of my husband?

I'm sorry for your loss.

 

Generally speaking, death benefits (whether term or whole life insurance) are not taxable to the beneficiary.  This is because the premiums were paid with after-tax dollars, which means the payout is not taxed again.

 

In some cases, if there is a delay in paying the benefit so that the final payment includes some interest, the interest will be taxable but not the main benefit.  The company would report the interest to you on a 1099-INT form.  (For example, if the death benefit was $25,000, and because of late payment you received an additional $60 interest, only the $60 interest is taxable income.)

 

My father-in-law had insurance that was converted by the insurance company into company stock, for some reason.  In that case, the value of the insurance was determined by the share price on the day he died.  Since it took a few days for the insurance company to cash in the stock and mail my mother in law a check, the stock price went up in the mean time so there was a small capital gain based on the increased value over those few days.  The rest of the payment was not taxable.  Any gain in that situation would be reported on a 1099-B. 

 

Some annuities that are purchased with pre-tax money (such as employer retirement plans) will be taxable when paid, in which case the payer will send you a 1099-R form at the end of the year.

 

1099-R, 1099-B and 1099-INT forms each have their specific place in Turbotax if you simply run the income interview, you will come to it.  Or you can click "show me everything" to see all the income options at once. 

 

If you aren't sure what kind of payout you received, you will need to call the company that made the payment.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Carl
Level 15

Where I have to enter the amount which was given to me by insurance company on the death of my husband?

Nowhere. With a few exceptions, life insurance proceeds paid to a beneficiary upon the passing of the insured are not taxable or reportable on any tax return.

There are some types of insurance policies where a small portion of the payout *MAY* be taxable, but it's rare. If anything was/is taxable, then the insurance company sends you some type of tax reporting document for the taxable amount - usually a 1099-R.

 

xmasbaby0
Level 15

Where I have to enter the amount which was given to me by insurance company on the death of my husband?

You did not ask about this, but just in case...

 

 

Very sorry for your loss.  For the year that your spouse died, you can still file a joint return.  That way, you will get the married filing jointly standard deduction of $24,000 (+ $1300 for each spouse 65 or older) which will lower the amount of income you are taxed on.

 

In My Info, you will need to indicate that your spouse died. When his name is in My Info,  there is a screen early in the interview that asks "Do any of these apply to [name] ?’” where you will do that, and then a drop down will appear where you can enter the date he passed.

If you have dependent children still living at home, you will be able to file as a qualified widow for the next two years after this tax return.  Post back if you need further help.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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