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Death Benefit from Life Insurance company

TaxStyle
Level 2

My client's father passed away in 2020. The father had a life insurance and a distribution was sent to my client. 1099R also issued and the recipient's name is my client's name on the form. I am just wondering is this income taxable?

On the 1099R box 2 there is a taxable amount. But base on the article i found on IRS says " 

  • Generally, life insurance proceeds you receive as a beneficiary due to the death of the insured person, aren't includable in gross income and you don't have to report them. "

the link: https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insuranc....

 

So I am confused now is this 1099R income taxable or not?

 

Thank you very much for the help

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1 Solution

Accepted Solutions
sjrcpa
Level 15

1099-Rs are not issued for life insurance. This sounds like an annuity. It is taxable.

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5 Comments 5
sjrcpa
Level 15

1099-Rs are not issued for life insurance. This sounds like an annuity. It is taxable.

BobKamman
Level 15

And annuities are mostly sold by life-insurance companies.  They're already in the business of predicting life expectancy and investing money for the rest of a customer's life.  

TaxStyle
Level 2

thank you

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sjrcpa
Level 15

You're welcome

qbteachmt
Level 15

The good news is, if the deceased had life insurance in addition to the annuity, your client should pursue the rest of their money.

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