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Is life insurance money taxable

  1. profile image44
    kim frankposted 7 years ago

    Is life insurance money taxable

    upon my fathers death, in 2010, I received life insurance money from him, do I have to declare this as income and pay a tax?  If so, what is the tax rate?

  2. soni2006 profile image79
    soni2006posted 7 years ago

    Hi Kim, life insurance money you have received as a beneficiary of your father's investment is tax free.

  3. Mark C Middleton profile image63
    Mark C Middletonposted 7 years ago

    As a direct beneficiary of the life insurance policy, it would be tax free.  You do not report it on your tax return and you will not receive a 1099 form for the proceeds.  However, sometimes when there is a delay in the payment, there can be interest added to the proceeds.  For example: A $25,000 policy pays $25,142.  The $142. is interest.  The interest only would be taxed and reported on your tax return on Schedule B as interest income.

  4. LandmarkWealth profile image80
    LandmarkWealthposted 5 years ago

    The Payment directly to you is typically income tax free, however it can be subject to estate tax if he owned the policy.  In 2010 there was no estate tax as it was temporarily phased out.  However many states have an estate tax as well.  And if a policy was owned by the deceased it is includable in his taxable estate.