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Old 09-06-2019, 04:39 PM
 
Location: California
499 posts, read 1,030,282 times
Reputation: 769

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Quote:
Originally Posted by fluffythewondercat View Post
my SIL says that when she received her $106k death benefit from the policy, $24k was withheld for taxes. I've never looked into insurance policy payouts since I'm no one's heir, so any idea why this might have been true? Thanks.
How much was withheld by the insurance company has nothing to do with how much is taxable. The insurance company should have asked how much your SIL wanted them to withhold, and they should have given her the option to not withhold any. The culpability is most likely with the insurance company. She should check with them to find out why they withheld that amount, and if it's way too much perhaps she can get them to make a correction / adjustment. Otherwise, she'll need to file and wait for a refund.
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Old 09-06-2019, 06:16 PM
 
Location: Phoenix, AZ
1,875 posts, read 836,113 times
Reputation: 4777
Quote:
Originally Posted by fluffythewondercat View Post



However, my SIL says that when she received her $106k death benefit from the policy, $24k was withheld for taxes.



I haven't read the other responses so this might duplicate some.


It's possible that she overlooked the question about withholding on the claim form and didn't opt out.


At any rate she should have gotten that $24,000 back when she filed her tax return.


I suggest you look at her tax return for that year before relying on what she is telling you.


Quote:
The culpability is most likely with the insurance company.

On the contrary, I would put the fault on the claimant who didn't read the claim form.
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Old 09-06-2019, 06:46 PM
 
Location: Scottsdale, AZ
8,313 posts, read 5,089,994 times
Reputation: 30430
Quote:
Originally Posted by ysr_racer View Post
Oh the humanity !!

You mean actually hire a professional in the field?

Up until now, I had faith in all you financial geniuses on this board.
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Old 09-07-2019, 08:04 AM
 
Location: Scottsdale, AZ
8,313 posts, read 5,089,994 times
Reputation: 30430
The spouse can either figure it out or not. The money is none of my business.

Last edited by fluffythewondercat; 09-07-2019 at 08:13 AM..
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Old 09-07-2019, 08:38 AM
 
Location: SW Florida
10,848 posts, read 5,092,122 times
Reputation: 22610
I don't want to hijack this thread but my question really doesn't warrant starting a new one. My mom passed this past June. She had around $48K in her bank account from the sale of her house. I was on her account as her POD. A few days before she died she wrote me a check for $46K. I gave half to my sister. After she died she still had $1900 in the account. Her bank sent me a check for that amount after I showed them her death certificate and my identification and once again I gave my sister half. Am I going to be the one that will be stuck paying taxes for the full amount?
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Old 09-07-2019, 08:43 AM
 
73,295 posts, read 73,074,368 times
Reputation: 50881
Quote:
Originally Posted by chiluvr1228 View Post
I don't want to hijack this thread but my question really doesn't warrant starting a new one. My mom passed this past June. She had around $48K in her bank account from the sale of her house. I was on her account as her POD. A few days before she died she wrote me a check for $46K. I gave half to my sister. After she died she still had $1900 in the account. Her bank sent me a check for that amount after I showed them her death certificate and my identification and once again I gave my sister half. Am I going to be the one that will be stuck paying taxes for the full amount?
there is no tax on a bank account being passed unless the estate was over the federal and state limits .
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Old 09-07-2019, 08:59 AM
 
Location: SW Florida
10,848 posts, read 5,092,122 times
Reputation: 22610
Thank you!
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Old 09-07-2019, 10:04 AM
 
Location: Scottsdale, AZ
8,313 posts, read 5,089,994 times
Reputation: 30430
Quote:
Originally Posted by mathjak107 View Post
there is no tax on a bank account being passed unless the estate was over the federal and state limits .
My MIL was keenly aware of this. Maybe too keenly.

Once she turned 70, she thought she would die at any moment, so she would periodically send off checks to her descendants to keep her "estate" below the limits.

Then the estate tax exemption was increased to $5 million (as I recall) and she stopped having to buy postage stamps.

I miss you, Jean, wherever you are.
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Old 09-07-2019, 11:18 AM
 
Location: VT; previously MD & NJ
2,273 posts, read 1,418,101 times
Reputation: 6657
Quote:
Originally Posted by chiluvr1228 View Post
I don't want to hijack this thread but my question really doesn't warrant starting a new one. My mom passed this past June. She had around $48K in her bank account from the sale of her house. I was on her account as her POD. A few days before she died she wrote me a check for $46K. I gave half to my sister. After she died she still had $1900 in the account. Her bank sent me a check for that amount after I showed them her death certificate and my identification and once again I gave my sister half. Am I going to be the one that will be stuck paying taxes for the full amount?
You don't have to pay income tax on POD money, but the money you "gave" to your sister might count as a gift. There is a gift tax if you give another person money above a certain amount. I don't know what the limit is. For that matter, the check your mom wrote to you just before she died might also count as a gift to you. She should have just left it in the account but too late now.

Search on IRS.gov for "gift tax"
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Old 09-07-2019, 12:12 PM
 
73,295 posts, read 73,074,368 times
Reputation: 50881
Quote:
Originally Posted by ansible90 View Post
You don't have to pay income tax on POD money, but the money you "gave" to your sister might count as a gift. There is a gift tax if you give another person money above a certain amount. I don't know what the limit is. For that matter, the check your mom wrote to you just before she died might also count as a gift to you. She should have just left it in the account but too late now.

Search on IRS.gov for "gift tax"
The gift just goes against the limit which is over 5 million .
It is double for a couple now on the federal
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