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. |
4. Change the Federal Tax record to "P" (percentage) and enter 0% in the 'Tax Percent' field.
This prevents Federal tax from being withheld. |
7. Change name in BIOSCN to "estate of ...".
You will want to check with your Legal or Tax advisor to be sure of the proper usage of name. |
10. Using DEDSCN, reduce the total gross (YTD,QTD, FYTD) on the Federal Tax record by the amount of the gross paid to the estate.
This amount is reportable on the 1099. |
11. Using DEDSCN, reduce the taxable gross (YTD, QTD, FYTD) on the Federal Tax record by the amount of the gross paid to the estate minus any annuities that may have been withheld on that last payment.
W2PROC will flag a warning for this employee indicating total annuities do not equal total gross less taxable gross. This warning is Okay and can be ignored. May want to attach notes to the W2REPT at Yr-End indicating why the warning is valid. |
The total gross on QRTRPT will be short compared to the total gross from the warrant checks processed for the payrolls, by the gross paid to the estate. |
If you made the payment in the same 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.
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