Where do I report charitable beneficiary deduction for group term life insurance?

I recently discovered an under-the-radar tax deduction in IRC Section 79(b)(2)(B) that seems to fly completely under the radar in most tax strategy discussions online. Basically, I found out that when your employer provides group term life insurance over $50,000, the premium value is normally considered taxable income. However, if you designate an IRS-recognized charity as the sole beneficiary for the entire tax year, that amount gets excluded from your taxable income! Since I'm single with no dependents, I updated my beneficiary to a qualified charity last year. This should reduce my taxable income by about $575 for the 2024 tax year. Pretty nice little tax hack! I'm trying to figure out where to report this on my 1040. Should I put it on Schedule 1, Line 24z based on the 2023 form structure? And if so, do I just need to write the IRC Section (79(b)(2)(B)) in the space where it asks for the type of income adjustment? Any help would be super appreciated!

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19 comments

Carmen Ruiz

•8M

This is a great find! You're right that this is a lesser-known tax benefit. For reporting this exclusion, Schedule 1, Line 24z is indeed the correct place for the 2023 form (and likely will be similar for 2024). When completing Line 24z, you'll want to write "IRC 79(b)(2)(B)" in the space provided to indicate the type of adjustment. I would also recommend attaching a brief statement explaining the exclusion, just to make it clear to the IRS what you're claiming. Something simple that references the charity being the sole beneficiary of your employer-provided group term life insurance over $50,000. Make sure you have documentation from your employer showing the amount that would have been included in your income if not for this exclusion. This might appear on your W-2 in box 12 with code C.

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Carmen Ruiz

•8M

You don't need documentation from the charity to prove they're qualified, but you should verify they're a 501(c)(3) organization recognized by the IRS. You can use the IRS Tax Exempt Organization Search tool online to confirm their status. The beneficiary designation form from your employer showing the charity as sole beneficiary is the key document you should keep with your tax records. This, along with documentation showing the imputed income amount that would have been taxable, provides the support for your exclusion claim.

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Andre Lefebvre

•8M

After reading your post, I had to look into this myself since I've never heard of it! I ended up using https://taxr.ai to analyze my situation and WOW - it found several deductions I'd been missing, including this one! My employer offers $150k in group term life and I had no idea the premiums over the $50k threshold were being added to my income. The AI analyzed my paystubs, identified the exact amounts, and walked me through changing my beneficiary designation. It even generated a letter template I could give to HR explaining why I was making the change. Super straightforward process!

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Andre Lefebvre

•8M

It analyzes your actual documents - you can upload W-2s, paystubs, tax returns, etc. and it identifies specific things you're missing. For the life insurance thing, it spotted the "Group Term Life" amount on my paystub that I was completely overlooking. Regarding privacy, they use bank-level encryption and don't store your documents after analysis. I was worried about that too, but they explain their security process before you upload anything. They just use the documents to generate personalized advice and then the system purges them. Way better than sending everything to a human preparer who keeps copies forever.

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QuantumQuest

•8M

I was super skeptical about using taxr.ai when I commented earlier, but I decided to try it with just my last paystub to see what would happen. It immediately flagged the GTL imputed income that I've been paying taxes on for YEARS. I had a $200k policy through work and I've been getting taxed on the portion above $50k this whole time! I followed the steps to change my beneficiary to a local charity I support anyway, and the system even calculated that I'll save about $720 in taxes this year. Already submitted the form to HR and they confirmed the change was processed. Honestly wish I'd known about this years ago!

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Jamal Anderson

•8M

I discovered this deduction a few years ago but had trouble getting a clear answer from the IRS about how to properly report it. After waiting on hold for hours over multiple days, I finally used https://claimyr.com to get through to an IRS agent. They have this service where they wait on hold with the IRS for you, then call you when an agent is ready to talk. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed I was reporting it correctly on Schedule 1, Line 24z and gave me specific notes about how to document it. Saved me hours of frustration and uncertainty.

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Jamal Anderson

•8M

It works by using an automated system that dials and navigates the IRS phone tree, then sits on hold for you. They don't skip the line or have special access - they just handle the waiting part so you don't have to. When they reach a human agent, they call you and connect you directly. They aren't cutting the line - they're just handling the frustrating hold time. Think of it like having an assistant wait on hold while you do other things. The IRS wait times are the same, but you're not wasting your day listening to the hold music. They actually show you your place in their queue and estimated wait time too.

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Liam McGuire

•8M

I owe everyone here an apology. After my skeptical comment earlier, I decided to try Claimyr because I was struggling with a similar tax question and couldn't get through to the IRS after trying for THREE DAYS. Holy crap it actually works! I got connected to an IRS rep within 90 minutes while I was out grocery shopping. Got confirmation on this charitable beneficiary deduction and several other questions I had. The agent even emailed me the relevant IRS documentation. I was 100% convinced this was some kind of scam, but it's legitimately one of the most useful services I've ever used. Sorry for being so negative before!

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Amara Eze

•8M

If you set up the charitable beneficiary mid-year, you won't get the exclusion for the portion of the year before you made the change. The exclusion only applies to months where the charity was the sole beneficiary for the entire month. You're definitely not too late for 2024 though! If you make the change now in April, you'd still get the exclusion for the remaining months of 2024 (typically May through December). So you'd still receive about 2/3 of the potential tax benefit, which is significant. Just make sure you maintain the charitable beneficiary through December 31, 2024.

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Yara Campbell

•2M

This is such a valuable thread! I work in employee benefits and can confirm this is a legitimate but underutilized tax strategy. One thing I'd add for anyone considering this - make sure to coordinate with your HR department when making the beneficiary change. Some employers process these changes quarterly rather than immediately, so you'll want to confirm the effective date to ensure you qualify for the full year exclusion. Also, if you're married, discuss this with your spouse since you're giving up the life insurance benefit that would normally go to them. The documentation Carmen mentioned is key - your employer should provide a statement or notation showing the imputed income amount that's being excluded. Keep this with your tax records along with proof of the beneficiary designation and the charity's 501(c)(3) status.

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