Foreign Whole life Insurance death benefit need to be taxed or not?

Forum|Forum|1 year ago
February 2, 2025
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Last year I got a death proceed of my husband's whole life policy from Hong Kong. Does the death benefit need to pay tax in the us?

I have read many information online, it seems policy with income each year needs to be taxed in the US. However, it is a whole life and there is dividend each year and deposited into the cash value. No money is taken out. Please see if any expert can help?

TurboTax Home & Biz Windows

SabrinaD2

The lump sum death benefit from a whole life insurance policy, including those from foreign policies, is generally not subject to income tax in the U.S. under IRS Section 101(a). However, any interest earned after the death benefit is paid may be taxable if the insurance company held the death benefit and paid you interest.

Dividends paid into the cash value during your husband's life are generally not taxable as long as they stayed within the policy and weren't withdrawn.

Select here to use the IRS Tool to Are the life insurance proceeds I received taxable?

Click here for additional information from TurboTax.