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Posted by Stuart Bronstein on May 21, 2008, 12:32 pm
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>> A letter from a major life insurance company begins with (their
>> words) "Good news", and goes on to explain that a very old whole
>> life policy has reached the point where the total dividends
>> received have equaled all of the premiums paid.
>>
>> The "good news" continues with the explanation that the above
>> means that $600+ of this year's $1100+ dividend will be taxable
>> income. (The tax can be deferred by purchasing additional paid up
>> insurance, which I choose to not do.)
>>
>> The question is: Is this Line 21 Other Income? If not, where is
>> it entered on Form 1040?
>
> Line 21. Despite what the insurance company calls the payment it
> is not a dividend for federal tax purposes.
Why isn't it considered a refund?
Stu
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