HR Quick Take: Employee Death and Taxes

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Davis Brown Law Firm

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.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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