Is there tax on a life insurance policy? ?

Question

My aunt passed away and through a life insurance policy, through State Farm she left me $5,000. I live in Pennsylvania...If there was tax, how much would I get after taxes? I plan to use the money for my apartment, when I get an apartment and savings...

Answer 1

it is not surprise for you to have this kind of question.many others does.try this one maybe useful.

http://insurance.freetipz.info/insurance...

Answer 2

Jessica M, Life insurance is actually very flexible. Since I'm from Texas I'm not familiar with the Pennsylvania laws and regulations, so I recommend you contact a local life insurance agent. http://www.easylifeinsuranceguide.com/Pe... They should be able to assist you.

Answer 3

If you are the beneficiary of the policy you will not have to pay federal income tax on the proceeds.

If the estate is the beneficiary and you are the beneficiary of the estate federal income tax may have to be paid (depends on the size of the estate).

Pennsylvania has a 15% inheritance tax for non-lineal descendants and non-siblings which would definitely apply if the estate was the beneficiary of the insurance policy.

If you are the beneficiary check with the department of revenues on line customer service center to find out where you can get a phone number and talk to a real live person who will have the answer.

Hope this helps

Jerry-the-bookkeeper

Answer 4

"Pennsylvania has a 15% inheritance tax for non-lineal descendants and non-siblings which would definitely apply if the estate was the beneficiary of the insurance policy"

Life insurance proceeds are not subject to the PA Inheritance Tax. whether paid directly to a beneficiary or to the estate.

Answer 5

Life insurance proceeds aren't taxable.  The only tax that it might affect is your relative's estate tax, since the amount of the benefit counts towards the cap.  This only applies if your aunt was worth over $650K.  Either way, it will be her estate that pays the tax, not you.

Answer 6

Life insurance proceeds are generally not taxable to the beneficiary.