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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 70½. How do I determine the amount I must withdraw each year from my IRA & 401(k) accounts to avoid a penalty?

Rev. date: 07/17/2015

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: 12/18/2014

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 that you neither repaid nor previously included in your income. You should receive a Form 1099-R (.pdf), Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., showing the gross proceeds and the taxable part. Report these amounts on lines 16a and 16b of Form 1040 (.pdf), U.S. Individual Income Tax Return, or on lines 12a and 12b of Form 1040A (.pdf), U.S. Individual Income Tax Return.

Rev. date: 07/15/2015

I am over age 70½. How do I determine the amount I must withdraw each year from my IRA & 401(k) accounts to avoid a penalty?

Generally, you can calculate the required minimum distribution (RMD) for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B (.pdf), Distributions from Individual Retirement Arrangements (IRAs). Use:
You can use Worksheet 1-1. Figuring the Taxable Part of Your IRA Distribution, in Publication 590-B.
For more information, see Publication 590-B for RMD on IRAs and Publication 575, Pension and Annuity Income, for RMD on 401(k) plans.