I have term life insurance through my job and i want to know does govt. take out taxes on life ins. policies?
I have a term life insurance policy through my job and i wanted to know if the irs will be taking taxes out if and when the policy is paid by insurance company.
December 18th, 2009 at 5:44 PM
If you die, your beneficiaries get the money tax free. Have a nice day.
December 18th, 2009 at 5:44 PM
No, life insurance proceeds paid upon the death of the insured are not taxable income to the beneficiary.
If the beneficiary is also the owner of a whole life policy some of the proceeds may be taxable but that would not be an issue with a term policy.
December 18th, 2009 at 5:44 PM
life insurance proceeds are not taxable to the recipient.
December 18th, 2009 at 5:44 PM
No, the life insurance is paid out when you die, tax free.
Depending on how much the insurance if for you could be paying taxes on the benefit now.
The IRS allows you to have $50000 worth of life insurance tax free. Any amount over that the company considers the premium a taxable benefit. There is a specific formula that changes annually so I don’t know the exact number off the top of my head but for every $1000 worth of coverage over $50000 you are charged something like 27-cents. This is considered income (non-cash) and you pay regular income tax and FICA taxes on this money.
December 18th, 2009 at 5:44 PM
Once you get above a certain amount of company paid life insurance policy, the premium for any excess is a taxable benefit.
The payout to beneficiaries when the insured dies is tax free.