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IRS.gov Website

Frequently Asked Tax Questions

Other - For Senior Taxpayers

  1. Are the proceeds I received from a reverse mortgage taxable to me?
  2. I exercised my rights to receive life insurance distributions before death. Are these proceeds taxable?
  3. I am over age 70 ½. How do I determine the amount I must withdraw each year from my IRA & 401(k) accounts to avoid penalty?

Rev. date: 01/11/2013

Are the proceeds I received from a reverse mortgage taxable to me?

No, the amounts received from a reverse mortgage are not taxable.  A reverse mortgage is a loan.  The lender is paying you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home.
Additional Information
Reverse Mortgages

Rev. date: 12/21/2012

I exercised my rights to receive life insurance distributions before death. Are these proceeds taxable?

If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or loans which were not repaid that were not included in your income. You should receive a Form 1099-R (PDF) showing the total proceeds and the taxable part.  Report these amounts on lines 16a and 16b of Form 1040 (PDF)or on lines 12a and 12b of Form 1040A (PDF).

Rev. date: 03/28/2013

I am over age 70 ½. How do I determine the amount I must withdraw each year from my IRA & 401(k) accounts to avoid penalty?

Generally, a required minimum distribution (RMD) is calculated for each account by dividing the prior December 31st balance of that IRA or retirement plan account by a life expectancy factor that IRS publishes in Tables in Publication 590 (PDF), Individual Retirement Arrangements (IRAs). There are three separate tables:
You can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, on page 44 of Publication 590 (PDF).
For additional information, see Publication 590 for RMD on IRAs and Publication 575 for RMD on 401(k) plans.