How/where do I claim an insurance cash surrender of 20k with a capital gain of 5k?

This should be reported to you on a tax document which is likely Form 1099R.  It should show the total amount of cash surrender and then the taxable amount which is an amount in excess of your cost in the policy.  It will be taxed as ordinary income.

Your insurance company should have determined the taxable amount and included it in Box 2a, if Form 1099R was received.  The only way I can figure out how to report the 1099-R, and get the correct taxable amount to flow to your Form 1040 is  to calculate it and enter it in box 2a of your 1099-R entry is not correct or the full amount.  

A cash value withdrawal (a surrender or partial surrender) and a policy loan are dispositions of an exempt policy. At the time of a disposition, the proceeds of the disposition that are in excess of the policy's adjusted cost base are a taxable policy gain.

As long as you keep your policy in force, you have nothing to worry about. The IRS does not tax the gains in cash value of a policy. When you withdraw money up to your basis, this money is also tax-free. You may even take loans against your life insurance policy and pay no income tax.

• Where do I enter Form 1099R in TurboTax?

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