Form 1099-LS

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All states | 22 types
Updated Jan 22, 2025
~ 8 pages
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Form 1099-LS is a tax form between a life insurance policyholder and a buyer reporting the sale of a life insurance contract. It is used to record taxable proceeds from life settlement transactions.
Form 1099-LS Page 1
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Reviewed by Kate Adkham

Template Description

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1099ls

Form 1099-LS is a tax document used to report sales of life insurance policies. It records the money earned by selling a life insurance contract to another person. This ensures that the IRS is informed of all sales transactions involving life insurance policies, safeguarding the transparency and accuracy of taxable income declarations.

Who Receives a Form 1099-LS?

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A 1099-LS form is issued to anyone who acquires a life insurance policy. This happens in a reportable transaction. This usually means transferring the policy for value. If you buy a policy in such a deal, expect to get this tax form.

What Is the Deadline for Submitting Form 1099-LS?

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A paper form 1099 LS must reach the IRS by February 28th. If it's filed online, the deadline is March 31st. You should get the form as the recipient by January 31st. Keep these dates in mind to stay compliant.

Parties Involved

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  1. Seller. The original policyholder selling their interest in the life insurance policy.

  2. Buyer/Acquirer. The entity or person purchasing the interest in the life insurance policy, liable to report the transaction via form 1099-LS.

  3. IRS. The federal agency receiving the reporting form to keep track of taxable transactions involving life insurance.

Key Terms

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  • Reportable Life Insurance Sale. Any sale of a life insurance interest for valuable consideration that is necessary to be reported to the IRS.
  • Surrender Value is the money a seller receives when selling or surrendering a life insurance policy before it matures or an insured event occurs.
  • Gross Proceeds. The total amount the seller receives from the buyer for selling the life insurance policy.

Steps After Receiving a Form 1099-LS

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When you receive a form 1099 LS, follow these steps:

  1. Review the Details. Ensure the details on the form are accurate. Check the transaction information and seller and buyer particulars.
  2. Consult an Expert. If you are unfamiliar with tax reporting practices, consider consulting a tax professional who can provide tailored 1099-LS instructions.
  3. Retain for Records. Keep a copy of the 1099-LS for your records. It’s essential for both current tax reporting and potential future inquiries.
  4. Report to IRS. Use the form's information to accurately report your income and include it in your IRS tax filing.

Loio provides a PDF tool to help fill out the form, making the process easier and more accurate.

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