I received extra income. I donated half. What amount do I pay taxes on?

Question

I sold a life insurance policy . I received money. I donated half to a charity. What amount do I pay taxes on?

Answer 1

charitable donations only affect your taxable income if you itemize your deductions instead of taking the standard deduction. So unless you own a house and have a mortgage(where the interest and prperty taxes are deductible), then you probably take the standard deduction. In that case, you get no real tax benefit except that inner sense of being a good person, and maybe youll go to heaven because you donated $$ to charity,

Answer 2

I am assuming that you itemize deductions and so you can take the charitable contribution on Schedule A. I am assuming you had a cash-value life insurance policy that you cashed out.

Likely you will owe no tax. Only the amount of the cash received from the insurance policy minus the premiums paid is taxable income. Unless you had a policy where the cash value was twice the premiums paid, your charitable deduction of half the cash value will wipe out any taxable income you had.