How to Process the Final Pay for a Deceased Employee's Taxes & 1099

Tax Forms

There are several steps to take when processing the final pay for a deceased employee's taxes. The U.S. Government Accountability Office offers a three page form that provides details on how, when and where the information must be filed. According to accountant Bernard Steinlauf, CEO of Account-Link Management Co-Inc., there are some key points to keep in mind. "As long as the deceased employee worked at least one day during a taxable year, he/she is responsible for paying taxes," Steinlauf says. "It will just go a different route."

Instructions

1. Report the employee's death to the payroll department as soon as possible, Steinlauf advises. All wages will be frozen and documentation will be noted.

2. Contact the direct deposit bank immediately with an end date, advises the Government Accountability Office.

3. Mail out a survivor memo, three GAO-36 forms and a W-9 form. The Government Accountability Office provides detailed descriptions of each of these forms, how each is to be used and by whom.

Tips & Warnings

• Review all paperwork pertaining to the employee to make sure detailed personal information is filled out, particularly his/her W-9 form, Steinlauf says.

• The GAO specifies that if the IRS W-9 form is missing or incomplete, final payment will not be processed. All pertinent information for next of kin should be notated on this form.

• "If the deceased had been on social security, the U.S. Government must be notified immediately," Steinlauf asserts. "The government will insist that anything paid after the date of death must be refunded. After which time a new social security schedule will be worked out for the widow or widower."

References

• Government Accountability Office: Payroll - Deceased Employee Final Pay Procedures