My situation concerns line 21 of the federal tax form 1040. This line pertains to "other income".
In May 2007, I received a dividend from my auto-insurance company. The amount of the dividend was $25.
According to page 24 of the instructions for form 1040, dividends on insurance policies are taxable if the dividends exceed the total of all net premiums that I paid for the contract.
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In late December 2006 or early January 2007, I paid $360 for auto insurance for the first six months of 2007. In late June 2007 or early July 2007, I paid another $360 for auto insurance for the next six months of 2007. So, I paid $720 for the year.
So, what are my "net premiums"? What is the total of these net premiums? Is the $25 dividend taxable?
Thanks for any information.