When you collect life insurance, is it earned income? Also, do you have to report on your income tax.?

Question

When you collect life insurance, is it earned income? Also, do you have to report on your income tax.?

Answer 1

Life insurance proceeds are not earned income and are not taxable if received by reason of death of the insured.

Answer 2

No, you do not need to report it because when the insured was paying for it, it was with taxed money already (no need to double tax).

Answer 3

No, it is not earned or taxable income.

Good luck.

Answer 4

in the US, life insurance proceeds are not taxable income.

however, if the policy was owned by the estate of the deceased, no matter who is to receive the proceeds, the gross amount of the payment is included in the estate's net assets for estate tax purposes, AND, if then necessary, the policy proceeds can be attached for payment of estate tax BEFORE the beneficiaries receive anything.

Answer 5

Nope not at all. The beneficiary pays nothing in taxes, federal for sure, but they may pay state taxes check with the state on that. The estate will pay taxes on life insurance but ONLY if the amount of the estate exceeds, I believe this year it is about 2 million. So if estate is 2 mil or less it pays no taxes. More than 2 mil the estate will pay taxes.