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Are the proceeds from a life insurance policy taxable?

September 8th, 2010 | | Tags: , , | 3 Comments | |

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I recently found out that my aunt who passed away had named me as the beneficiary on her life insurance policy, is this income taxable?

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3 Responses to “Are the proceeds from a life insurance policy taxable?”

  1. Lauren F Says:

    Not to you – the policy may have earned some interest between her passing and the day you get your check. That interest (if big enough) could be taxable to your aunt’s estate.

    Sorry for your loss.

    Now you get to figure out what to do with the windfall. Take some time to think that through carefully. Your aunt must have cared for you a lot to leave you this legacy, and it could be a life changing chance to clear up old debts, set the stage for an easy retirement, or help out a charity.

  2. v b Says:

    No. Only interest added to the amount after she died is taxable.

  3. Casey Says:

    If what you stand to receive is over a certain amount, you will have to pay an inheritance tax. Most states don’t make you pay the inheritance tax unless you will be receiving like 75,000 or somewhere around there.

    When I received money from my grandmother’s estate. I think it was included in my income that tax year.

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