Is this taxable?

[Shelby6718]

What is the name of your state (only U.S. law)? Oklahoma
I have a small paid up insurance policy I am considering cashing in. Is this transaction taxable and, if so, do I get a 1099 from the insurance company or do they withhold the tax on their end.
Thank You,
SWhat is the name of your state (only U.S. law)?

 

[FlyingRon]

The payout is taxable where it exceeds your basis. They'll actually quite likely 1099 you for the full amount of the payout, and you'll need to report the actual gain. Usually they will not deduct taxes unless you somehow blew off the information requests (like what your SSN) and they resort to backup withholding.

Computing the basis may be a little tricky. It's essentially all the premiums you paid, less any prior dividends or payouts.

 

[anteater]

Is this transaction taxable and, if so, do I get a 1099 from the insurance company or do they withhold the tax on their end.

Some part of the proceeds may be taxable. Assuming the premiums were paid with after-tax dollars, the surrender value in excess of the premiums paid (less any policy dividends received) is subject to income tax.

The company should issue you a 1099. You would need to check with the company to see if they will do any withholding.