I was filling out the forms for receiving a death benefit from a life insurance policy as a beneficiary and when I got to the part about withholding taxes I put down 10% federal and 5% state. I now know I did not have to withhold taxes for this. Is there any way I can get this money back? And what would I need to do?
Accidentally withheld taxes on death benefit from life insurance. How do I get this back?
byu/Golfbro888 intax
Posted by Golfbro888
6 Comments
You get it back as a refund when filing your 2025 return. If you want to see if this can be reversed immediately, you need to ask the insurance company that paid the benefit. I don’t know if they will be able to or not
File a tax return, if you are due a refund they will send it back.
File a tax return next year…
When you file your tax returns for this year, you will get a refund if you had too much total withholding from all sources.
(Assuming that it’s too late to stop it, and the insurance company has already remitted the tax.)
You’ve essentially made an tax payment that will be included on your 2025 tax return. File the return as early as you can, and you’ll get the refund then. (If you still have a balance due, even with the extra tax payment, then it just reduces the amount you would owed, and possibly reduces your underpayment interest that the IRS would have charged.
Did you cash the check already? If you already cashed the check, you’re probably out of luck, because that’s constructive receipt. The transaction is done and they can’t really undo it.
If you *haven’t* cashed the check, you can ask them to cancel/stop payment (you might need to put this in writing) and then just do the paperwork to repeat the transaction without tax withholding.
If this was a direct deposit, you can try to ask them to reverse the whole transaction and then redo it. (Again, you’ll probably have to put something in writing.) They might say no since this is technically constructive receipt, too, but they have a little more leeway since they can reverse the whole transaction from their end. But again, they might say no.