Jul
From what I comprehend, if you’ve term policy with the initial death benefit of $500,000, that should be free and clear from being taxed considering it has no real cash value (correct me if I'm wrong).
I'm curious if my employer has life insurance set up and covers the monthly premiums. Does that change whether or not the amound to be received upon death is taxable.
I've looked at it both ways and I could see it being possible with either of them.
In case one, the employer is paying for my life insurance, and that could possibly be looked at as income.
On the other hand, it could simply be looked at as a benefit, therefore not changing the fact that it is non-taxable.
I'm just so confused, please help?!
Answer:
To quote Michael M:Usually any benefits over a certain amount that are provided by your employer (I want to state $50,000 but I'm not sure) the company has to list the premium as a post tax benefit.
It is $50,000–check your pay stub. It is a tax on employer-paid life insurance benefits, and sometimes, the employer picks up the bill. It might appear as an in-and-out item on your check stub, though.
The death benefit, however, should be non-taxable. I say should be because, if the beneficiary receives an amount over the face value of the policy, then he or she may have to pay income tax on the amount that is over the face value ($500,000 policy, but they receive $500, 050, they’ve to report the $50).
Answer:
Rule of thumb:
If premiums r after tax money, payouts r not taxable.
If premiums r b4 tax money, payouts r taxable on receiver. Report Abuse
Answer:
The proceeds aren't taxable to you. The premium for amounts over $50,000 are taxable.
Disability insurance benefits become taxable when provided by an employer, but life insurance proceeds aren't.
Answer:
yes, if the cost is paid for by your employer, the money paid out will be taxable.
Answer:
Usually any benefits over a certain amount that are provided by your employer (I want to state $50,000 but I'm not sure) the company has to list the premium as a post tax benefit. If you have one of these benefits provided by your employer you should able to look at your pay stub and see some kind of item in the taxable benefit column for group life insurance.
Given that your employer has paid the premium and you have already paid the income taxes on the premiums they paid for you, you shouldn't have to pay taxes on the death benefit when it is paid out just like any other life insurance policy.
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