Do I have to pay tax on life insurance dividends?
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insurance dividends are tax free and you do not report them on your tax return. That's because life insurance
dividends are a return of premiums
that you previously paid for the life insurance policy and the life
insurance dividends reduce the cost of your life insurance policy and are not taxable
on your tax return until
they exceed the net premiums you paid for the life insurance policy. Life
insurance dividends, and interest on the life insurance dividends, on Veterans life insurance are tax
free and you do not report them on your tax return. Dividends on the common
stock of a life insurance company, and
interest on the corporate bonds of a life insurance company, are taxable and
you must report them on your tax return.
If you deducted life insurance premiums in your business
from your tax return and now receive life insurance dividends you
should reduce your current tax years life insurance premium tax deduction on
your tax return by the amount of the life insurance dividends, or claim them as taxable
income on your tax return.
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Related tax
information about life insurance dividends |
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Is interest earned on life insurance
policies taxable on my tax return?
Are life insurance death benefits
taxable on my tax return?
Is interest on veterans insurance
dividends taxable on my tax return?
Income Related Questions and Answers |
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IRS publications about life insurance dividends:
Additional information on life insurance dividends and dividend income can be found in IRS
Publication 550, Investment
Income and Expenses. For more information about insurance proceeds received in
installments refer to IRS Publication
525, Taxable and Nontaxable Income. Also see
IRS Publication 17, Your Federal
Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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