Is there a tax on money received from a life insurance policy and if so is the tax paid by the beneficiary or by all who received money from the beneficiary per the decedents wishes?

already exists.

Would you like to merge this question into it?

already exists as an alternate of this question.

Would you like to make it the primary and merge this question into it?

exists and is an alternate of .

IT is paid by the one receiving the money. Similar to a ROTH IRA where the money is taxed as it is placed into the insurance policy then only the interest is taxable. if however the money is like a Traditional IRA where it is pretax money then the whole thing is taxable. Then the amount is concidered income and taxable up to 33% of total. IF the money sits with the insurance company and not cashed in and the insurance company doesnot collect interest then the policies is held without interest. One of the still remaining, best aspects of Life insurance, (the investment aspect of which has been generally agreed to be poor at best) is that the insurance industry has gotten congress to retain that payouts of life insurance to a beneficiary are NOT TAXABLE.
That is also why one should always have their insurance policy payable to a specific passes very quickly, directly to them, out side of the estate and being outside the estate, is exempt from income estate/inheritance and transfer taxes. (If you make yourself or your estate the beneficiary, you would lose the last advantage,as it would become part of the estate).
citations:Amounts received under a "life insurance contract" , that are paid by reason of the insured's death aren't included in the gross income of the recipient (i.e., beneficiary) ( Code Sec. 101(a) ) (unless the policy was transferred for value). The exclusion applies to lump sum payments made at the time of the insured's death, and to amounts paid later to the extent the payment doesn't exceed the amount payable at death. ( Reg § 1.101-1(a)(1)
56 people found this useful

Is there tax in CO on money received as beneficiary on a CD account?

The interest earned on the CD is taxable to you in the state ofColorado. One way to avoid that is to withdraw the money from thecertificate of deposit before any interest is e

Do you pay taxes on money you receive from a parents life insurance policy?

Generally speaking, life insurance proceeds (death benefits) are received income tax free by policy beneficiaries.. Any subsequent monies that are earned through investment o

Are taxes due on money received from a life insurance policy?

In most instances, no income tax is due on life insurance proceeds. (A rare exception would be if the policy was sold, making it a capital asset. Very rare, though.) There is

If you have a 350000.00 life insurance policy and only paid 20000.00 in to it How much will your beneficiary receive?

In most life insurance policies your beneficiary would get 350,000.00 and the company would keep your 20,000, but that is not the case for all and in some cases your beneficia

How do all beneficiaries on a life insurance policy split the money?

They split it evenly unless the insurance policy specifies that the proceeds are to be divided among several beneficiaries in some other way. Sometimes a policy can be payable

You are a beneficiary of a life insurance policy which is in an irrevocable trust your step mother left instructions that you are not to receive any money from it can she do that?

Your step mother can only change the beneficiary on the life insurance policy if she is the owner of the policy or if she is the trustee of the trust. If she's the trustee the

If an ex-spouse is listed as beneficiary on a life insurance policy does that person remain the beneficiary and receive the money in the state of Georgia?

Generally, yes. A person must be careful to change the name of the beneficiary on their life insurance after a divorce of death of the named beneficiary. You should consult wi

Who receives the money from life insurance if the beneficiary is deceased the insured or the heirs and there is no contingent beneficiary named?

If there is no living beneficiary when the insured dies then payment of proceeds from a life insurance policy would be paid to the estate of the insured. If the insured had a