Do You Need to Make Life Insurance Benefits Taxable?
Updated: Oct 10
Common Kinds of Taxable Life Insurance Death Benefits While few people are taxed after the death of the policyholder, some do have the responsibility to pay a tax on life insurance death benefits according to the IRS. However, like all income, the law can make death benefits taxable and require a percentage of the profits. Examples situations include:
Decisions for interest or miscellaneous income
Beneficiary types and policy structures
Policies with cash value withdrawals and loans
Benefits from employer-sponsored insurance
Ownership, transfer, and control of the policy Consider how the following situations may apply to you as a death benefit beneficiary. Our insight into taxable life insurance benefits will support your financial decisions before you find the IRS imposing taxes on your income. Youll also avoid reporting taxable income that they dont require and save considerably.