# Insurance pay off



## berniej (Mar 5, 2012)

Both my daughters cashed in their US life Insurance policies.Where do you list the money they recieved just under income?

Thanks in advance

Bernie


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## Bevdeforges (Nov 16, 2007)

Direct from Publication 17:



> *Surrender of policy for cash.* If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income.
> 
> You should receive a Form 1099-R showing the total proceeds and the taxable part. Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A.
> 
> More information. For more information, see Life Insurance Proceeds in Publication 525.


If this is US life insurance, note that the insurance company should send out a form 1099-R which would determine for you what amounts to put on which lines.
Cheers,
Bev


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## berniej (Mar 5, 2012)

we never received a 1099R should I just put the amount they received in block 16.

Bernie


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## Bevdeforges (Nov 16, 2007)

berniej said:


> we never received a 1099R should I just put the amount they received in block 16.
> 
> Bernie


Actually, no. The amount you're supposed to declare as income is the difference between how much money they have paid into the policy and the cash value they received on cashing it out.

Take a look at that publication 525 about insurance. If you have to, try to reconstruct what they have paid in on the policies over the years and deduct that from the amount they received. 
Cheers,
Bev


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## berniej (Mar 5, 2012)

I will try to do that.Its the only us income they have .All the rest of their income is from dutch sources that will be on the 2555ez.

Thanks 

Bernie


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## berniej (Mar 5, 2012)

I roughly figured out what they paid in ,the one daughter paid in more than she got back the other got back more than she paid in.So if I hav e this right the one has to claim her excess on line 16 and theother who paid in more than she got back doesn't have to do anything?

Thanks for your help.

Bernie McKenna


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## Bevdeforges (Nov 16, 2007)

berniej said:


> I will try to do that.Its the only us income they have .All the rest of their income is from dutch sources that will be on the 2555ez.
> 
> Thanks
> 
> Bernie


Be careful - the 2555 only excludes their "earned" income (i.e. salary) from Dutch sources. If they have interest or other "passive" income, it has to be reported without being included on the 2555 form.
Cheers,
Bev


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