Quick question for accountaints/tax guru's

[Jackofalltrades]

My father died about 6 weeks ago and my stepmother is getting 74k in life insurance benefits which she should get any day now. We've heard a couple different things now about whether or not it's considered a taxable income. Any insight would be greatly appreciated.

Thanks,

John

[charlotte49er]

Seems to me, with a properly named beneficiary life proceeds are not taxed and they avoid probate.

But I would double check that. The laws may have changed since my Mother died.

[Ja Rhule]

I'm pretty sure it's taxable

[Ja Rhule]

http://wiki.answers.com/Q/Are_the_proceeds_of_a_life_insurance_policy_taxable

[Ja Rhule]

http://www.theroundtable.org/topics/show/208

It depends. It is not taxable but it can be.

[CharlotteBeer.com]

I'm not sure you're going to get any help calling then "accountaints."

[dimbee]

Talk to Skew. He's an accountant

[Acewalker]

Estate taxes have been repealed for this year so it wouldn't matter anyways, it should be tax-free

[pstall]

"should" and is are miles apart. Depends on the policy. Depends on her tax bracket.

Skew should nail this though.

FYI on this. If you do have a life ins policy, make sure you don't do 100% to one person. For example, my wife and kids get part of mine, but I have a Living Trust to get some as well. This offsets a tax hit, protects income and preserves some for later for the kids and their kids one day.

Just do your homework. Crap, I promised myself no cognitive thinking till July 6th.

Oh well.

[Ja Rhule]

I'm an accountant as well but I do not deal with taxes. Straight up audit and corporate cash control here.

[Mesmer]

I just took a life insurance class last semester and I honestly couldn't tell you.

... No I didn't pay attention.

[Acewalker]

"should" and is are miles apart. Depends on the policy. Depends on her tax bracket.

Skew should nail this though.

FYI on this. If you do have a life ins policy, make sure you don't do 100% to one person. For example, my wife and kids get part of mine, but I have a Living Trust to get some as well. This offsets a tax hit, protects income and preserves some for later for the kids and their kids one day.

Just do your homework. Crap, I promised myself no cognitive thinking till July 6th.

Oh well.

Hence why I said should since I'm am unaware of the details...

[Skew]

I don't do taxes either, but I do know that in general, any gain can be taxed. It would probable depend on the type of policy, amount received, her tax bracket, ect. To give you a simple answer: Yes.

If you need more detail, send me a PM and I'll look more into it.

[Ja Rhule]

I don't do taxes either, but I do know that in general, any gain can be taxed. It would probable depend on the type of policy, amount received, her tax bracket, ect. To give you a simple answer: Yes.

If you need more detail, send me a PM and I'll look more into it.

Thats what they taught us in college. Every gain is taxable... even if you find one dollar on the street, it have to be reported as a gain.