Q: One of our employees died near the end of December, but his final paycheck won’t be issued until 2020. Does that affect the taxes?
A: If final payment is made in the year of the employee’s death, you would withhold FICA/FUTA, but not federal income tax. If payment is made after the year of death, you should not withhold FICA/FUTA or federal income tax. In regards to end of year reporting, you should issue a W-2 for all the payments made prior to death and, if post-death payments are made, issue a Form 1099-MISC to the Estate, and report wages in Box 3 of that form.