Form 1099-LS

What is Tax Form 1099-LS?

Tax Form 1099-LS is used to report the sale or exchange of certain life insurance policies. This form is filed by the reporting party (such as a life insurance company or other entity involved in the transaction) when a reportable life insurance sale occurs. It’s required when a policyholder surrenders a life insurance policy, exchanges it for another, or sells it to a third party. The purpose of the form is to help the IRS track taxable income resulting from the sale or exchange of the life insurance policy.

Who Needs to File Tax Form 1099-LS?

Tax Form 1099-LS must be filed by individuals or organizations that meet the following criteria:

• You are involved in the sale or exchange of a life insurance policy.
• You are the party responsible for reporting the transaction, such as an insurance company, broker, or financial institution.
• The transaction involves the transfer of a life insurance policy, either through a sale, exchange, or surrender.
• The policyholder or seller of the policy is required to report taxable income from the sale or exchange.

This form is used to ensure proper tax reporting of life insurance transactions. If you’re unsure whether you need to file, consult a tax professional!

When to File Tax Form 1099-LS in 2025?

Here’s a simple guide to the deadlines for filing Tax Form 1099-LS in 2025:

• January 31, 2025: Provide a copy of Form 1099-LS to the recipient (the policyholder or seller).
• February 28, 2025: File the form with the IRS by mail.
• March 31, 2025: File the form with the IRS electronically.

Since Form 1099-LS is used to report the acquisition of life insurance contracts, it has specific IRS filing requirements. Meeting these deadlines ensures compliance and helps avoid unnecessary fines.

What Are the Penalties for Filing Tax Form 1099-LS Late?

If you fail to file Tax Form 1099-LS on time in 2025, the IRS may impose penalties based on how late the form is filed. Here’s a breakdown:

• $50 per form: If you file up to 30 days late (by March 31, 2025).
• $110 per form: If you file more than 30 days late but before August 1, 2025.
• $280 per form: If you file after August 1, 2025, or fail to file at all.
• Higher penalties for intentional disregard: If you deliberately fail to file, the penalty can reach $570 or more per form, with no maximum limit.

To avoid penalties, file Form 1099-LS on time and promptly correct any errors if necessary. If you miss the deadline, it’s better to file late than not at all, as penalties increase the longer you wait.

How to File Tax Form 1099-LS Online?

Filing Tax Form 1099-LS online is simple and convenient. Here’s how to do it:

1. Choose an IRS-approved e-file provider:
   • Visit the IRS website for a list of authorized e-file providers or use reliable tax software like TurboTax or TaxAct.
2. Create an account or log in:
   • Register with the selected provider and set up your business profile, including your Employer Identification Number (EIN).
3. Enter transaction details:
   • Provide the recipient’s name, address, Taxpayer Identification Number (TIN), and other relevant information about the life insurance policy sale or exchange.
4. Review the information:
   • Carefully double-check the transaction details, especially amounts and policyholder information.
5. Submit the form electronically:
   • After reviewing, submit the form via the e-filing system. You’ll receive confirmation when the IRS accepts it.
6. Send a copy to the recipient:
   • Don’t forget to send the recipient their copy of Form 1099-LS by January 31.

Tips for Filing Tax Form 1099-LS

Here are some helpful tips to ensure you file Tax Form 1099-LS correctly:

1. Verify filing requirements:
   • You need to file the 1099-LS if the life insurance policy transaction is reportable.
2. Request accurate details:
   • Ensure that you have accurate information about the recipient and transaction. Use Form W-9 to collect the correct TIN.
3. Mind the deadlines:
   • Provide a copy of the form to recipients by January 31, 2025, and file it with the IRS by the respective deadlines.
4. Double-check for accuracy:
   • Carefully review all details, including transaction amounts and recipient information.
5. Consider e-filing:
   • E-filing is faster, reduces errors, and provides instant confirmation from the IRS.
6. Keep a record:
   • Retain copies of the form and receipts for at least 3 years for your records.
7. Fix any errors promptly:
   • If an error occurs, submit a corrected form immediately to prevent further issues.
8. Consult a tax professional if needed:
   • If you’re unsure about the reporting requirements, it’s a good idea to consult a tax professional.

1099-LS Form FAQ