Welcome Guest. Register Now!  


Itemized Deductions Schedule-A


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 07-15-2016, 05:33 PM
Junior Member
 
Join Date: Jul 2016
Posts: 1
VUL Life Insurance

Hi experts, I have purchased the VUL life insurance and I have put the premium of $23,000. If I terminate the policy now, I will get the cash value of $21,000. My question is if I take out the cash value now, do I need to pay any taxes for this or report the loss for this or file the form 1099 next year? Thank you very much in advance!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 07-15-2016, 08:19 PM
Moderator
 
Join Date: Oct 2010
Posts: 4,838
Quote:
Originally Posted by jessy View Post
Hi experts, I have purchased the VUL life insurance and I have put the premium of $23,000. If I terminate the policy now, I will get the cash value of $21,000. My question is if I take out the cash value now, do I need to pay any taxes for this or report the loss for this or file the form 1099 next year? Thank you very much in advance!
In general, certain types of cash value life insurance policies ,i.e, universal and traditional whole life policies. may not allow you to withdraw from your cash value at all. However, aslongas your policy does allow such withdrawals, any withdrawal you make will typically be tax free up to your basis in the policy , in your case up to $23K. Your basis is the amount of premiums you have paid into the policy, minus any prior dividends paid or previous withdrawals. You already paid income tax on those dollars once, so they won't be taxed again when you withdraw them from the policy; you have a cash value life insurance policy with a cash value of $21K. Your basis in the policy is $23K. as you make a withdrawal of $23K or less, there will be no income tax consequences. Be aware that surrender charges may also apply when you withdraw from your policy, even if you withdraw only up to your basis. One way to avoid this and still access your money is to take a policy loan from the insurance company, using the cash value in the policy as collateral. The amount you borrow is generally not treated as taxable income as long as you repay the loan, and there are no surrender charges because you're not actually withdrawing your money. But you'll have to pay interest on the loan, which is not tax deductible. A surrender charge is a fee your cost that your insurance company imposes for the cancellation of your policy, or for reducing the face amount of life insurance. you need toocntat the ADMIN fo more info on the surrender charge



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Life Insurance proceeds dadsas C-Corporation 3 09-15-2015 03:20 AM
Transfer from Life Insurance to 529 srjjmart Miscellaneous 1 02-08-2015 06:55 AM
Life Insurance tal10 For 2014 1 12-08-2014 06:06 PM
Insurance is nessessary for life st david Life Insurance 3 11-12-2013 01:47 AM
Does it matter what Life Insurance Company I select to purchase Life Insurance? Edmund Life Insurance 0 08-23-2007 08:24 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning