E-News
Making Finances Simple. Changing Lives.
6/8/2023 Life Insurance TaxationUpon the passing of a loved one, you may be in a position to receive a death benefit on a life insurance policy. It’s important to know the possible tax implications… In general, death benefits from a life insurance policy are not counted as taxable income. But there are times when life insurance policy proceeds may be taxable.
In the case where proceeds aren’t paid out immediately, and interest is earned on benefits, that interest earned can be taxable. Life insurance is sometimes used for business purposes where the business owner deducts premiums paid. In this case, proceeds from the policy may be taxable. In addition, cash value policies that are surrendered will often have taxation on any growth in the account beyond the contribution basis. Lastly, beneficiaries may have to pay taxes on life insurance benefits if the total value of the estate exceeds lifetime limits (currently at $12.06 million per person). In this case estate taxes can be a consideration, and even inheritance taxes in some states. Feel free to reach out with questions…we’re happy to help! Comments are closed.
|
|