Income tax question Any experts out there?
My mom passed away I received $22,000 from an insurance policy. I spent $12,000 on her funeral. Do I pay income taxes on the entire $22,000 or do I receive credit for the $12,000?
My mom passed away I received $22,000 from an insurance policy. I spent $12,000 on her funeral. Do I pay income taxes on the entire $22,000 or do I receive credit for the $12,000?
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Favorite Answer
A lump sum insurance payment after the passing of the insured to the beneficiary is not taxed. You do not have to declare it as income.
http://www.irs.gov/publications/p525/ar02.html#en_US_2012_publink1000229373
Bobbie
Life insurance payment due the death of the insured would NOT be taxable income at all and they do not have any kind of tax credit for any funeral expenses during the tax year.
Hope that you find the above enclosed information useful. 11/09/2013
StephenWeinstein
The death benefit from a life insurance policy is not taxable. You do not pay taxes on the entire $22,000 and you do not get credit for the $12,000. You pay tax on exactly $0.00 and get credit for exactly $0.00.
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Death benefits and cash values in a life insurance policy (if applicable) are almost always tax-free. The only time you are liable for capital gains tax is if your insurance policy is sold to a third-party investor (called a settlement company). In these cases, you pay capital gains tax based on the difference between the total premiums you've paid into the policy and the amount of money you receive from the investor.
Read more: http://www.ehow.com/info_7753104_do-taxes-life-insurance-benefits.html#ixzz2kC11N9mQ
Max Hoopla
You pay tax on none of it and can't write off the cost of the funeral.