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I have a question about life insurance. I hope I'm posting this in the right category. If not, maybe someone here would be so kind as to move it where it belongs?
I am the beneficiary of a life insurance policy in the amount of just over $10K. I understand this is not federally taxable income to me.
I received a letter from the insurance company stating that an interest bearing account will be established with the proceeds and I will be receiving a checkbook in the mail shortly. It basically stated that I could use the account as needed, or close out the account by writing a check to withdraw the full amount.
What I'd like to do is withdraw the entire amount and deposit it into my corporation (LLC) for business improvements.
My question is - I know that all transaction in excess of $10K must be reported to the IRS.
When my bank (company account) reports this transaction, what do I need to do to keep the money tax exempt? I don't know how this works. Will the IRS contact me and all I have to do is show them the policy paperwork?
I'll be working with my accountant, of course, about the loan to the company and repayments, etc... but I just want to make sure it's OK to close that account created by the insurance company and deposit the funds to my company account without making the funds subject to federal taxes.
tax status it has nothing to do with the bank other then the bank gives the irs the heads up on money coming in if its cash. the distribution of the life insurance is reported by the insurance company..
whatever you earn at the bank going forward is taxable income on that money.
It is ok to close that account and deposit it into your business checking account and it won't create any kind of tax consequences except the interest earned on the money in the savings/checking account will become taxable but the amount isn't going to be significant by any means.
I have a question about life insurance. I hope I'm posting this in the right category. If not, maybe someone here would be so kind as to move it where it belongs?
I am the beneficiary of a life insurance policy in the amount of just over $10K. I understand this is not federally taxable income to me.
I received a letter from the insurance company stating that an interest bearing account will be established with the proceeds and I will be receiving a checkbook in the mail shortly. It basically stated that I could use the account as needed, or close out the account by writing a check to withdraw the full amount.
What I'd like to do is withdraw the entire amount and deposit it into my corporation (LLC) for business improvements.
My question is - I know that all transaction in excess of $10K must be reported to the IRS.
When my bank (company account) reports this transaction, what do I need to do to keep the money tax exempt? I don't know how this works. Will the IRS contact me and all I have to do is show them the policy paperwork?
I'll be working with my accountant, of course, about the loan to the company and repayments, etc... but I just want to make sure it's OK to close that account created by the insurance company and deposit the funds to my company account without making the funds subject to federal taxes.
Thank you in advance for any insight.
Sounds like you want to skip all taxes that might be due somehow. It takes a good accountant to help you do that ,or not, without breaking the tax laws.
Jailhouse advise you get here on this topic could be a quick trip ticket to jail if you use it so use an accountant to be safe.
Sounds like you want to skip all taxes that might be due somehow.
I didn't get that impression at all from OP.
IRS Publication 525: Life Insurance Proceeds
Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. However, interest income received as a result of life insurance proceeds may be taxable.
Thanks for the advice, everybody. It's greatly appreciated.
This will not be a cash transaction, so no worries there, I guess.
Thank you, Gandalara... Jeez!!!! I am NOT trying to evade paying taxes!
Knowing that the funds are not taxable, I just wanted to make sure I could transfer the money to my company account for improvements without any issues arising.
Is it possible to get individual insurance for cheaper and just as good coverage as group insurance or is all individual insurance pretty much worthless? Thoughts?
Life Ins is as good as the policy and the company you choice. If you are in real good health Ind Coverage (term) is a little cheaper then group coverage. Group coverage has guarantied coverage so they have to write a policy on everyone regardless of health so it costs more. But group coverage is not portable so if you change job you lose it. Ind coverage is yours
Life insurance is one of the most powerful ways of passing wealth totaly tax free that we have left
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