IRS Form 712 Instructions

This article will help you understand what you need to know about forming taxes. In the case that you may need to become familiar with Form IRS 712, it may be required to include the value of any life insurance proceeds in the gross estate for federal estate tax purposes. If you are the executor of a deceased person’s estate, you’ll need to know this.

  • What is Form 712 from the IRS?
  • Who utilizes IRS Form 712 in a tax filing?
  • What details does IRS Form 712 include?
  • What to consider when managing the life insurance section of the estate tax filing.
  • Let’s begin by acquiring additional knowledge about the nature of this tax document.

    Before we proceed, please recognize that this article exists for educational purposes only and is not legal or tax advice. If you need specific and detailed advice about your talk with a tax professional or financial advisor, consult a life insurance company.

    What do you think?

    What details does IRS Form 712 include?

    This tax form consists of two sections.

  • Part I: Deceased-Insured.
  • Part II: Insured Living.
  • Let’s examine each section of the form to determine the kind of data it includes.

    Part I: Deceased-Insured.

    This form, known as the 706-NA Form IRS, is used for the estate of a nonresident individual who is not a citizen of the United States. Additionally, the executor should file the 706 Form IRS with Schedule D of the form, as specified in this particular section.

    Section I includes personal details about the deceased individual, particularly:

  • Name.
  • Social Insurance number. of the deceased person.
  • Name. of designated beneficiaries
  • Time of passing.
  • Part I also includes details regarding the life insurance policy itself, which encompass:

  • Name. and address of insurance company
  • Policy category.
  • Policy’s worth.
  • Policy number.
  • Premium quantity.
  • Amount of benefits in the event of death.
  • Whether there were occurrences of possession or transfers of the policy before the passing of the insured.
  • IRS Form 712, Part I contains insurance information about the decedent

    This information may be suitable for more complex situations, such as an irrevocable life insurance trust. This may not apply to a term life policy or a group life insurance policy. In addition to the fundamentals, there is a wealth of other financial information about the insurance policy.

  • The nominal worth of the life insurance policy.
  • Total of gathered profits.
  • Refund amount of premium.
  • The total sum of proceeds if payable all at once.
  • Deductions for any outstanding debt owed to the company are taken into account when calculating net profits.
  • Part II: Insured Living.

    In a situation where the transfer of ownership of a policy to another person occurs, it may be necessary to file Form 709-IRS as part of the Generation-Skipping Transfer Tax Return and Gift Tax Return for tax purposes.

    It may also be used with Form 706 by the IRS in situations where the decedent owned another life insurance policy.

    Part II consists of two sections.

  • Section A: Basic InformationSection B: Policy Details.
  • Section A: General Information

    This section includes:

  • Full name of the contributor or deceased person.
  • Social Insurance number.
  • Gift date.
  • Date of deceased person’s passing.
  • IRS Form 712, Part II, Section A contains general information about the life insurance policy

    Section B: Information on Policies.

    Section B provides additional information about the life insurance policy, elaborating on the basic policy details stated in Part I.

  • Birth date.
  • The total premium value and payment frequency.
  • Assignment date.
  • Terminal reserve quantities.
  • Total net worth of the policy.
  • The net overall value of a life insurance policy, particularly for gift or estate tax purposes, is determined by factoring in dividends, debts, or any extra premiums paid.

    If the policy is a single premium policy or paid up policy, Form 712 will contain additional information on that as well.

    IRS Form 712, Part II, Section B contains specific information about the life insurance policy

    When the executor submits the tax return for the estate, they can utilize none, a few, or the majority of the details provided in this document. Nonetheless, the executor is relieved from the obligation of submitting IRS Form 712, in brief.

    You need to provide this report as service revenue internal, but you are not responsible for producing this tax form for estate or gift tax purposes. Additionally, this information also goes to any other responsible party for reporting life insurance information or to any successor trustee.

    Who utilizes IRS Form 712 in a tax filing?

    There are a few gatherings involved in this.

    Executor of the estate

    After the passing of the deceased, it is the executor’s duty to manage the financial matters of the departed, which encompass:

  • Assisting the surviving partner or other recipients in filing life insurance requests.
  • Submitting an estate tax declaration and settling estate taxes on the taxable estate.
  • The life insurance company plays a vital role in this procedure as it is the sole holder of this information. Nevertheless, the executor is unable to generate the specific information demanded by the IRS.

    Trustee

    The role of the trustee could either be symbolic or substantial. Depending on the specific life insurance policy and trust arrangement, the trustee (or their successor) generally assumes the duty of submitting the tax return for the trust if the beneficiary of the life insurance policy is a trust.

    Life insurance company

    In order to finalize the estate tax return, the person in charge should furnish a duplicate of this tax document to the life insurance firm as and when required.

    Where can I find a copy of IRS Form 712?

    For informative reasons, you can obtain a duplicate of this document from the IRS website or by selecting the file underneath.

    Video walkthrough

    Watch this informative video to gain a better understanding of your life insurance statement as recorded on IRS Form 712.

    Https://youtu.Be/cCMdlTp9wyU.

    Table of contents

    This form, notably one of the most forms used by the United States IRS to accompany other estate tax forms, is not filed by itself but rather as part of the Return Tax Transfer Generation-Skipping (and Estate States United: 706 Form IRS). Form 712 IRS is an informational tax form used to report the value of life insurance policies as part of the estate tax return.

    IRS Form 712 will not be utilized unless you are submitting an estate tax return (or infrequently, a gift tax return), to put it differently.

    Frequently asked questions

    Here are some commonly asked questions about this tax document.

    How can I utilize IRS Form 712 in a return for estate tax?

    Irrespective of whether it was encompassed within the deceased person’s total assets, you must furnish a duplicate of IRS form 712 for every life insurance policy in this particular scenario. Along with the submission, you must finalize Schedule D and submit it if this is applicable. If there was any coverage on the deceased person’s life, it is mandatory to submit Form 706 and may necessitate this form.

    Will I be required to pay taxes if I utilize IRS Form 712?

    Generally speaking, the proceeds of a life insurance policy are not subject to income taxes in most situations. However, if the estate is subject to estate taxes, the proceeds may be taxable regardless of whether they are at the state or federal level.

    Will I be required to pay taxes if there is an IRS Form 712 associated with a group life insurance policy?

    If the employer pays the premiums, the amounts received are generally considered taxable income. Conversely, if the employee pays their own life insurance premiums, the proceeds are not usually subject to income tax.

    What should I do if the insurance company refuses to provide Form 712?

    Most life insurance companies should provide you with a certified death certificate when you request this form, either upon the owner’s request or when you provide them with a certified copy of the insurance carrier’s contract, including relevant materials such as check proceeds, riders, and copies of the insurance policy information, which should include Form IRS Schedule 706.

    Do I require a duplicate of IRS Form 712 for every life insurance policy?

    Yes. Every life insurance policy owned by a deceased person must be accompanied by a distinct Form 712.

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