Question

All of the following should generally be included as taxable income on Schedule 1 (Form 1040), line 21, EXCEPT: Reimbursement received for medical expenses deducted in a prior tax year. Life insurance proceeds received after the death of a spouse. Taxable portion of a disaster relief payment. Dividends exceeding net premiums paid on an insurance policy.

Answer 1

Answer:

Answer is Option 2: Life insurance proceeds received after the death of a spouse.

Explanation:

Life insurance proceeds are generally not taxable. They are paid after insurer's death. It would only be taxable if the policy was given to the spouse for a price. Even if proceeds are paid under accidental policy or health insurance policy, they are not taxable. Proceeds are always paid as a lump sum amount and not in installments.

Other given options, 1, 3 and 4 like reimbursement for medical expenses, taxable portion of a disaster relief payment and dividends exceeding net premiums paid are taxable.