This is a potentially very expensive lie. The problem is that it is not an outright lie, but a misleading misrepresentation.
It is true that life insurance proceeds are not subject to income taxes. Let me repeat that: insurance proceeds are a completely income tax-free gift to the beneficiaries. When an insured dies, the beneficiaries will receive the life insurance proceeds free of income taxes. There is not even a place on the beneficiary’s 1040 to report receipt of life insurance proceeds. So, again, life insurance proceeds are not subject to income taxes. This basic law is found in §101 of the Internal Revenue Code (what we call the "IRC"). You can look at this section of the IRC most easily by going online to www.law.cornell.edu/uscode/. Find your way to title 26 and you are on your way.
But before you shout praises about life insurance not being subject to income taxes, consider the following. There is another law regarding the taxation of life insurance proceeds. That law is found in IRC §2042. You can look it up. Section 2042 says that life insurance proceeds are subject to estate taxes at the insured owner’s death. This means that when the insured (who is often the owner of the life insurance) dies, the life insurance proceeds go to the beneficiaries free of income taxes, but the proceeds are counted as part of the insured owner’s total estate, along with his house, retirement accounts, and other assets. And it is the total estate that is subject to estate taxes. So in determining a life insurance owner’s estate taxes, the life insurance must be taken into account–it is fully counted in calculating estate taxes. That’s the law. Section 2042.
So to say life insurance is not subject to taxes is misleading, a half lie. Life insurance proceeds are not subject to income taxes, but they are subject to estate taxes. Of course, the life insurance and other assets may be exempt from estate taxes under the 2011 and 2012 tax laws which exempt $5 million of a taxpayer's assets from estate taxes. Further, there are other ways to ensure the life insurance proceeds will not be subject to estate taxes even for people with more than $5 million in assets. But that requires professional counsel by a competent estate planning attorney.
A Few Missing Words in a Will
Healthprose is a repository of medical information portal providing all necessary facts about various medicines and its usage. The portal also offers various drugs at affordable prices thereby making everybody gain access to medications easily. www.healthprose.orghas a very few credentials to order medicines over the online portal and has a secured payment gateway mechanism along with various delivery