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USPS-R Deceased Employee Final Payment Processing

Listed below are some important facts pertaining to processing a final payment for a deceased employee:

Important Fact-

• Wages that were constructively received by the employee while he or she was alive are reported on Form W-2 as any other regular wage payment, even if you may have to reissue the payment in the name of the estate or beneficiary.

Processing Facts-

• If the payment was processed in the same calendar year the employee died, you must withhold social security and Medicare taxes on the payment and report the payment on the employee’s Form W-2 only as social security and Medicare wages to ensure proper social security and Medicare credit is received.

• If the payment was made after the year of death, (example-employee died in 12/2019 and payment to estate is being processed in 1/2020) do not report it on Form W-2, and do not withhold social security and Medicare taxes.

Reporting of the payment-

• Whether the payment is made in the year of death or after the year of death, you also must report it in Box 3 of Form 1099-MISC, Miscellaneous Income, for the payment to the estate or beneficiary. Use the name and taxpayer identification number (TIN) of the payment recipient on Form 1099-MISC.

Click the following link to the documentation that contains full details on how to process a payment for a Deceased Employee.

Redesign video available for AOS/LGS/Independent Auditors

Our UAT group has recorded a training video for auditors.  It has been posted to the SSDT YouTube channel.   The video includes an overview of the grids and report features as well as tips and tricks to assist them in maneuvering around  the Redesign software.