[Alberta's Child]

The insurance company sent me one of those tax forms a 1099/ that means I owe tax.

Maybe not. That may just mean that the insurance company reported it to the IRS as a disbursement to you -- on your tax return you may actually report it as tax-exempt income. I think you should consult a tax professional about this. You don't need an expensive accountant -- H&R Block generally does this kind of thing for a very reasonable cost.

[lchoro]

The form 1099-R you received displays what amount you received and how much of the distribution is taxable. Both amounts are to be recorded on front of form 1040 on the line for Pensions & Annuities. The following is an image of the form 1099-R.

http://www.irs.gov/pub/irs-pdf/f1099r03.pdf

If you receive more than one, just record the total amounts on form 1040 and just clip each copy of form 1099-R to the tax return.

[mlmr]

Maybe not. That may just mean that the insurance company reported it to the IRS as a disbursement to you -- on your tax return you may actually report it as tax-exempt income.

It says on the instructions on the back that it is a death disbursment and that I need to report it as taxable income.

[Young Werther]

...and HR Block counsels married folk to divide their kids and file as head of household and maximize Earned Income Tax Credits. Check last years WSJ about the HR Block behaviors which maximize their profits at the cost of the filer's sanity!