How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15732
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I am going to surrended my life insurance policy I will receive

Customer Question

I am going to surrended my life insurance policy I will receive $776.42.
what taxes will be due on this at the state and federal level
The death benefit is $6974.20 There is a loan on it for $3000.00.
Do thks to pay for expensive medical treatment.
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.
Hello,When you surrender a life insurance policy you generally pay tax on the portion you receive that is greater than the premiums you have paid.Your taxable amount will depend on how much in premiums you have paid. You have a life insurance policy with a cash surrender value of $7000. You have an outstanding policy loan of $3000. There have been no distributions from the policy. You surrender the policy to the insurer cash. You have taxable ordinary income of cash + loan - premiums. You did not state the premiums paid (or your other income for the year) but you can plug in the numbers into the equation above. The result will be added to your other income and taxed at your regular rate.