The Digestible IRS Series
Written by Sam Sweitzer April 10th, 2021
What does the IRS have to say?
The short answer, no. The IRS Publication 25 explains that proceeds paid to you from a life insurance policy because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This means that you do not have to include life insurance proceeds in your taxes.
What does that mean for me?
This means if you have received a check for a life insurance policy following the guidelines outlined by the IRS, you do not pay taxes on that money. This money is meant to help avoid financial catastrophes while dealing with emotional trauma. Losing a loved one can mean losing an income stream, the house, or other assets if not thoughtfully planned for. Planning for the worst and hoping for the best makes for an easier mind.
How do I make sure my payout is not taxed?
Give us a call and find out! We work diligently to ensure that the life insurance policies we put in place are considered a nontaxable life insurance policy in the eyes of the IRS. If you have concerns or questions about the taxable nature of your life insurance payout now is the time to ask. Reach out using the information below.
The Internal Revenue Service. (2020). Publication 525, Taxable and Nontaxable Income. Retrieved from https://www.irs.gov/publications/p525
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