Are Life Insurance benefits taxed?

Question

I dont know if that's the correct terminology, but when your are the beneficiary of a life insurance policy and the person dies, the money you collect. . . is that something you have to pay federal/state taxes on?

Answer 1

No. The estate (the deceased person) is responsible for all taxes

Answer 2

Federal no ck your state.

Answer 3

What is paid DIRECTLY to the beneficiary- NO it is not taxable. When you take an insurance policy out on yourself, you create an IMMEDIATE estate. So, when you pass, the insurance amount IS added into the value of the estate. If the estate is woth, I be lieve this year it is about 2 million or less, than NO ESTATE taxes are owed. If, on the other hand, the estate is over the 2 million, the ESTATE WILL owe taxes.

Estate taxes, possibly, if the estate value exceeds the terms set for today. If the estate is worth less, than no taxes at all will be owed. BENEFICIARIES pay NO TAXES AT ALL EVER, except maybe state taxes so check with your state.

Answer 4

No. Sorry for your loss.

Answer 5

It depends on the type of policy. Most of the time you do have to pay taxes on the income. However, there are some policies now that avoid that situation by paying out a death benefit that exceeds the value of the insurance policy allowing, in effect, the taxes to be paid by the policy. Check with your tax accountant.

Answer 6

No, at least for federal taxes.

Answer 7

If you are the beneficiary of a life ins policy,there is no tax.

  That's the  wonderful thing about life ins.

IF the Estate is beneficiary, then, LOL>

The proceeds are subject to the estate tax, and it could take months, if not years, until the heirs to the estate see a cent of it.