Are life insurance proceeds income on my tax return?
Generally, life insurance proceeds are not taxable income and do not need to be reported on your tax return.
If a policy was transferred to you for valuable consideration, the exclusion of the proceeds is limited to the sum of the consideration you paid, additional premiums you paid, and certain other amounts. There are some exceptions to this rule. For additional information, see IRS Publication 525 . An example of this would be if you purchased the right to the life insurance proceeds from someone who is terminally ill.
If a policy was transferred to you for valuable consideration, the exclusion of the proceeds is limited to the sum of the consideration you paid, additional premiums you paid, and certain other amounts. There are some exceptions to this rule. For additional information, see IRS Publication 525 . An example of this would be if you purchased the right to the life insurance proceeds from someone who is terminally ill.
