Donna Genie explains why deducting officer's life insurance premiums usually backfires. A $2,000 premium saves about $500 in taxes now, but makes the $1,000,000 death benefit taxable to beneficiaries, costing far more later.
Officer's life.
Insurance is often one of those things people hear about and they say, well, I don't really want to spend on that because it's not deductible.
Let's talk about.
Why it's.
Not deductible or when it is deductible.
The reason that we hear about officers life insurance.
Not being deductible.
Is based on the benefits.
So in the world of taxes, anytime you take a tax deduction for something somebody else has income, the reason that you don't want to.
Take the deduction.
You can, but you don't want to. Because if.
Someone gets the.
Benefits from.
That officer's life.
Insurance policy paying out upon death, then if you took a deduction, they have to pay taxes.
On the proceeds.
So it's really not worth it. Because let's take a little example.
I was working on a tax return.
Today and a client paid, let's make it $2,000 for officer's life insurance last year. With the taxes.
They'Re probably going to.
Save about 25% of that or $500. But let's say that next year he.
Were to pass away and his wife.
Would have received the $1 million benefit if he took that deduction to get that measly $500. That means her million dollar.
