Nova Scotia tax, In easy terms, please explain how I figure if I need to pay tax on insurance that I cashed in.
Over the years i paid in premiums 1000.00 per year for approx 20 years. Some years they took the payment out because it was a tough year and couldn't pay the premium. I generally got an annual dividend of approx 500.00 a year.
This year I closed it out (had to) by getting the balance left of 14k. I had taken 3k as a loan the year before but didn't pay it back. The policy itself was for 100,000.00 So I have paid in approx 20,000 and had dividends of approx 5000.00 (didn't get 500.00 for the first few years) I have plenty of capital gains exemption left, can't I use that.
Also should not the Insurance Company have taken out the tax if indeed, I am required to pay some. is it taxable the same as income. Thanks a lot
If I cashout a whole life insurance policy where would I enter it on my federal tax form?
Thank you for your inquiry.
If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. You should receive a Form 1099-R showing the total proceeds and the taxable part. Report these amounts on lines 16a and 16b of Form 1040.