This was a small life ins. policy (probably bought around 1980)-we paid $10 per month and rec'd a small dividend each year which was reported. We paid in approx $3,000 and the check was for $2700. I don't have any other info. I know it needs to be reported to IRS but don't know where or what amt to report. I do my taxes online. Thanks for any help.
2007-01-31 04:17:34 · 2 answers · asked by Dale H 1 in Business & Finance ➔ Taxes ➔ United States
You rec'd proceeds - so is the policy still in effect or did you cancel it and get the $2700 refunded to you? If you have been getting dividends and have reported them when received, you have already paid taxes on that income.
It comes down to whether the $2700 is income or a refund. The insurance company will have to tell you that by either a 1099-R or no income statement for the money. Contact the insurance company to determine 'what' the money is considered. If it is not income and just a cashed out policy, it may be considered nothing more than a closed savings account with the IRS. Reporting it to the IRS on your taxes is something to determine after you find out exactly how it is classified.
2007-01-31 05:11:30 · answer #1 · answered by Margaret K 3 · 0⤊ 0⤋
If there is any income on this the insurance company will send you a 1099R form reporting how much income you have.
You will need to adjust the income they report if any by the amount of dividend income you reported over the years. You have already reported the income that may appear on the 1099R form. They problem you have is that dividends paid on a life insurance are not income each year they are a return of your premium.
2007-01-31 12:35:21 · answer #2 · answered by waggy_33 6 · 0⤊ 0⤋