QUESTION:
How do I handle paying tax on receiving the
proceeds from a life insurance policy held in Canada?
Being a US citizen and residing here, is there a way
to bring the funds across the border into some sort
of sheltered account? It is a non-taxable benefit pay-
out from Canada Post....but I don't know how or
whether to claim it here in the US.
======================
david ingram replies:
There are no US or Canadian taxes on a Life insurance payout you receive
from Canada. The only exception is if the Life Insurance policy is part of
an RRSP (like a 401K or IRA) and is coming out of a tax sheltered account in
Canada.
In this case, unless the beneficiary is a minor, a spouse or disabled child,
there is no method of rolling the plan into any Canadian or US tax deferred
plan if that is your question and it is registered. An RRSP Life insurance
policy pays out after tax dollars to the beneficiary because it is taxed on
the deceased's final tax return.
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