I received $9,000 from my late grandma’s life insurance policy. Only 1,000 is taxable. What tax form do I use?
My uncle distributed the life insurance policies to all my cousins and to me. I received roughly $9,000…however, my uncle also said that only $1,000 would be taxable or, in other words, only $1,000 would need to be reported. I just want to double check that what my uncle said is true. He sick with cancer this year and can’t really help out with my taxes. What tax form would I use? And would I need to list the entire $9,000, or just the $1,000? (FYI, I need to itemize for my student loan interest also…I know I would need to use the 1040-A form for this itemization) Should I use the 1040-A or the 1040?
Thanks for your help!
Now that I remember, it was not my uncle who distributed the checks, but the actual insurance company. But my uncle did tell me that only 1000 of the $9000 would be taxable. He didn’t mention me having to use a special tax form. My grandma died in November of 2006, and I received the check in January 2007.
It sounds like your uncle received the proceeds in his name, and then distributed to all the cousins himself. Usually, if the “cousins” were the named beneficiaries, the insurance company would send you a check direct. For tax purposes, a State Inheritance Tax Return should have been done, and all taxes paid through the estate. Otherwise, a Form K-1 should have been sent to you for the total distribution, which you would claim on your tax return.
