Legal Question in Wills and Trusts in Maryland
Life insurance and money received from sale of house left in will
My mother recently passed away and I was the beneficiary on her life insurance.Do I have to claim the remaining money after the funeral on my income tax. Also my 5 siblings and I will receive about $3,000 each from the sale of her house from her will, do we have to claim this on our income tax
2 Answers from Attorneys
Re: Life insurance and money received from sale of house left in will
Yes. The tax code says you should report income from any source.
Re: Life insurance and money received from sale of house left in will
With all due respect to the previous answer, I would like to add that the US tax code, 26 USC § 101, specifically provides that the proceeds of life insurance, if paid by reason of the insured's death, are not included in the recipient tax payers gross income.
Further, in 26 USC § 102, the code similarly excludes from gross income the value of a bequest made by will.
I'd have to look at a 1040 and its related schedules to see whether this income is reported in some way, but either way, the value of the life insurance proceeds and the cash distribution from the sale of the house are not taxable.
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