IRS and death benefits, does the IRS tax death benefits paid to you when your spouse dies?

Question

Like insurance from life insurance policies

Answer 1

No, they don't. If you or your spouse own life insurance ... one of you dies ... and the proceeds goes to the surviving spouse ... it is not subject to income tax nor estate tax.

As a general rule, life insurance proceeds are income tax free.

As to estate taxes, regardless of the owner, life insurance on a spouse would be estate tax free under the unlimited marital deduction rule.

Answer 2

What kind of death benefits are you talking about?

Ok, thank you for the clarification. No, life insurance is not taxable.

If you work things out properly between spouses their entire estate can pass to the survivor without any estate taxes being payable. I have attached a link to an estate planning guide.

Answer 3

That depends.

If it's life insurance then the benefits are not taxable to the extent that they represent the face value of the policy. If any of it is accrued interest, that amount is taxable.

If it's a non-insurance death benefit paid by an employer then that would be fully taxable.

Answer 4

Do you mean social security? They used to pay $255 upon death.

That has been taken away. Not only that, but you have to return the full amount of Social Security check if someone was getting that, for the month the person died.

It is an overtaxed system. Expect to get less as the years go on...

Answer 5

Like life insurance? Or???

Jointly held property, such as a house, isn't. Bank accounts and anything not jointly held may be.

Answer 6

im not talking about life ins im talking about death benifits that i get every month

Answer 7

IT'S THE IRS WHAT DO YOU THINK??