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Question for the Money Doctors

Question submitted on Oct 13, 2015.

Question

my mother passed away my sister and i will be getting some money from her pension and life insurance. what tax forms are needed for me to use this year when filing.

Answer

Generally speaking, life insurance proceeds are typically excluded from taxable income, although some interest may accrue during the settlement period.  If this is the case, you will receive a form 1099-INT.  The pension income is most likely taxable and you should receive a form 1099-R.  Report these amounts on your federal tax form 1040 and state income tax form, if applicable.     Depending on the nature of the pension there might be some planning options available for you and your sister, in which case consulting with a local CPA/PFS in your market may assist you in optimizing your inheritance. visit www.findacpapfs.org to find a specialist near you.


For additional information visit http://www.360financialliteracy.org/

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