Surrender of Paid-Up Additional Insurance

[Janitor Bob]

New Client....Not a lot going on....SSA-1099, two 1099-Rs, and a 1099-MISC.....easy-peezy

but...also included in his papers was a check stub/statement for a $1,274.93 check he received from Prudential. The reason for the check is stated as "Surrender of Paid-up Additional Insurance".

What is this? I know very little about insurance.

Neither of his 1099-Rs are for this amount.

advice? Is this a taxable issue?

[Terry D EA]

This sounds like an insurance policy the taxpayer owned and he surrendered the value of the policy thus receiving a check for said surrender value. Not knowing what the policy was or how it was funded makes it difficult to answer. However, if this was a life insurance policy and the premium paid with post tax funds then it is not taxable. If there were any other type of policy/annuity etc that was surrendered that earned interest then the interest would be taxable. I kind a doubt this is interest but then again, can't be sure. Ask your client some additional questions as to why he placed this stub with the rest of his tax documents.

[michaelmars]

when was the check dated, might be 2014 thus nothing to deal with this year and, next year you might have the 1099r

[Janitor Bob]

OK...I found several more check stubs/statements...all of them have 2013 dates...all have the same Reason for Check as mentioned above...total combined amount is $1901.68.

I also see that one of his 1099-R's is for PRUCO Life Insurance...which I just realized is Prudential....However, the amount on the 1099-R is only $1,166.80

Is it likely that this 1099-R from Pruco is for these payments.....and part of it being not taxable as return of premium?

[kcjenkins]

Very likely.

[JohnH]

The 1099-R should have an account number at the bottom. If an account number is also showing on the check transmittals, that should close the loop for you.