Is the life insurance payout I received taxable?

Written by Updated on: January 13, 2016

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A nice benefit of receiving a life insurance payout is that the money generally is not taxable.

The Internal Revenue Service says that if you receive the money as a beneficiary of a life insurance policy, the money isn’t counted as gross income and thus doesn’t need to be reported on your federal taxes.

There could be taxes owed if the life insurance policy owner were someone other than your mother. To find out if this would affect your family’s situation, read Life insurance tax surprise: The unholy trinity.

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Penny Gusner

Contributor

Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.