Form 8925 is the IRS report a business files with its tax return when it owns life insurance on its employees under contracts issued after August 17, 2006. It reports how many employees the business had, how many were insured, the total insurance in force, and whether the business holds a valid written consent from each insured employee.
This guide follows Form 8925 and its instructions (Rev. September 2017) and IRS Notice 2009-48, as of October 2026.
Who has to file
Generally, every policyholder that owns one or more employer-owned life insurance contracts issued after August 17, 2006 must file Form 8925 for each tax year the contracts are owned. A policyholder is the person or business that owns the contract, runs a trade or business employing the insured person, and is a direct or indirect beneficiary. Related businesses and businesses under common control count too. You attach it to the policyholder's income tax return, such as Form 1120 or Form 1120-S, for each year a contract is in force.
The four lines
| Line | What you report |
|---|---|
| 1 | Number of employees the policyholder had at the end of the tax year |
| 2 | How many of them were insured at year end under employer-owned contracts issued after August 17, 2006 |
| 3 | Total employer-owned life insurance in force at year end for those employees |
| 4a and 4b | Whether you hold a valid consent for each employee on line 2, and if not, how many are missing |
Employee here includes officers, directors and highly compensated employees, and an insured person must be a US citizen or resident.
Why the consent question matters
Form 8925 is the reporting side of section 101(j). Notice 2009-48 explains the tax side: for an employer-owned contract, the death benefit the policyholder can exclude from income is limited to the premiums and other amounts it paid for the contract. The rest is taxable, unless an exception applies and the notice and consent rules were met. The exceptions cover an insured who was an employee at any time in the 12 months before death, or a director or highly compensated employee when the contract was issued, and amounts paid to the employee's family, a designated beneficiary, a trust for them or the employee's estate. So the yes or no on line 4a isn't paperwork. It tells the IRS whether a future payout is likely to be tax-free.
The notice and consent rules
- Before the contract is issued, tell the employee in writing that you intend to insure their life and the maximum face amount, in dollars or as a multiple of salary.
- Tell them in writing that the business will be a beneficiary of any proceeds when they die.
- Get their written consent to be insured and to coverage continuing after they leave.
The instructions add that the consent isn't valid unless the contract is issued within a year after it was signed, or before the employee leaves, whichever is earlier. Notice 2009-48 says notice and consent can be done electronically if the system meets set conditions, including a way to record an electronic signature and to produce a hard copy if the IRS asks.
Face amounts and more than one policy
A single consent can cover several contracts, as long as the total stays within the amount the employee was told about. The notice's example, as of October 2026, is an employee told about a maximum $1 million face amount who consents in writing: the business can buy two contracts of $500,000 each. Telling an employee the cover will be whatever maximum the insurer allows doesn't count; you have to give a figure or a salary multiple.
If you missed a consent
There's no formal fix in the law, but Notice 2009-48 says the IRS won't challenge an exception if the business made a good-faith effort, such as a formal system for new hires, the failure was inadvertent, and it was discovered and corrected by the due date of the return for the year the contract was issued. One limit is absolute: because consent must be written, it can't be obtained after the insured employee has died.
Exchanges and changes
- A contract issued after August 17, 2006 as part of a section 1035 exchange for a contract issued before August 18, 2006 doesn't need Form 8925.
- A material increase in the death benefit or another material change makes it a new contract, so the form is then required.
- For master contracts, adding covered lives counts as a new contract only for the added lives.
Records to keep
The instructions say you must keep adequate records to support what you report. In practice that means each employee's written notice and signed consent, the date each contract was issued, and the face amounts. The IRS estimates the recordkeeping for this form at 2 hr., 23 min., more than the time it puts on preparing the form itself, which tells you where the work is.
Step by step
- List every life insurance contract the business owns on an employee's life and its issue date.
- Count employees at year end for line 1 and insured employees under post-August 17, 2006 contracts for line 2.
- Total the insurance in force on those employees for line 3.
- Check each consent against the issue date for line 4a, and count any gaps for line 4b.
The verdict
Form 8925 takes minutes to fill in, but the consent answer on line 4a reflects a decision made years earlier, when the policy was bought. Build notice and consent into hiring or policy purchase, keep signed copies with the policy file, and check the count every year before the return goes in.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
One more form that confuses people is covered in the walkthrough of the life insurance statement.
Frequently asked questions
What is Form 8925?
It's the IRS report of employer-owned life insurance contracts issued after August 17, 2006, filed with the policyholder's tax return.
Who must file Form 8925?
Generally, every policyholder owning one or more employer-owned life insurance contracts issued after August 17, 2006, for each tax year the contracts are owned.
When is Form 8925 filed?
Attach it to the policyholder's income tax return for each tax year an employer-owned contract is in force.
What is a valid consent for Form 8925?
Before the contract is issued, the employee gives written consent to be insured and to coverage continuing after they leave, and the contract is issued within a year of the consent or before they leave.
What happens if there's no consent?
Under section 101(j), the death benefit excluded from income can be limited to the premiums and other amounts the policyholder paid, unless an exception applies.
Can notice and consent be done electronically?
Yes, if the electronic system meets the conditions in Notice 2009-48, including recording the employee's consent.
