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PGrover
January 6, 2025
Question

Final check for a deceased employee in desktop version

  • January 6, 2025
  • 1 reply
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We need to issue a final check for a deceased employee. We're not sure how to report the SS & Medicare wages and taxes only and then issuing the payment to the executor or trustee (when we get this information.) Has someone done this and if so, what steps do you take? We're using the desktop version of Enterprise, if that matters.

1 reply

R
RhoiceW
January 6, 2025

My condolences for your loss, Grover. I can guide you through issuing a final check for a deceased employee in QuickBooks Desktop Enterprise.

 

Before issuing a paycheck for your employee, you need to update their status first as Deceased in their employee profile in payroll.

 

Here's how:

 

  1. On the menu bar, click Employees then select Employee Center. 
  2. Double-click the name of the deceased employee to open their profile.
  3. Go to the Employment Info tab, and click Termination.
  4. Enter the Last day worked, Last day on Benefits, and Last day on Payroll.
  5. Select Deceased and then click OK.

 

 

Once the status of the employee has been updated, you can proceed to create the final paycheck.

 

Here's how:

 

  1. From the Employees menu, select Pay Employees, then choose Termination Check.
  2. Review the Pay Period Ends date, Check date, and the Bank Account the payment comes from. 
  3. Place a checkmark next to the employees who need a termination paycheck.

 

Next, create the termination check:

 

  1. Under the Release Date column, select the Calendar icon, then choose the employee's release date or enter it manually.
  2. Enter and review the hours or salary.
  3. Select Open Paycheck Detail to review the paycheck details.
  4. If you wish to send the check via direct deposit, ensure you select the Use Direct Deposit checkbox. If issuing a paper check, leave this unchecked.
  5. If you don't want vacation or sick time to accrue for this specific paycheck, select the Do Not Accrue Sick/Vac checkbox.
  6. When you're done, select Save & Next to create a check for another employee, or select Save & Close to return to the Enter Payroll Information window.

 

To complete processing the paycheck:

 

  1. In the Enter Payroll Information window, select Continue.
  2. In the Make Employees Inactive window, choose whether to select Make Inactive to ensure the employee does not appear in payroll anymore, or select Keep as Active if needed.
  3. Review the amounts for each employee.
  4. Review the Check/Direct Deposit printing options.
  5. When you’re ready, select Create Paychecks.

 

Furthermore, you can refer to this article to detailed steps on how to create a final paycheck for your deceased employees in QBDT: Create final paychecks for terminated employees.

Additionally, I'd like to provide this article for you to be guided the step-by-step process of correcting employee overpayments by reducing future paychecks in QBDT.

 

I'm delighted to walk you through the essential steps of processing your final paycheck in QBDT. If you need further assistance with managing your employees, feel free to drop a reply. It's my goal to help you stay on top of your company's financials. Take care.

P
PGroverAuthor
January 7, 2025

By marking the employee as deceased, does this let the system know that the wages are NOT taxable wages for Federal and State withholding? I don't want to find out later that my reporting is incorrect. I'd rather get it correct from the start.

 

Also, I know I have to establish a net $0 check in Payroll, only reflecting wages as taxable for SS & Medicare and withholding only those taxes. Do I establish a deduction for the balance of pay that will then be paid through AP and assigned as a 1099-Misc payment? 

Tori B
Tori B
January 7, 2025

Thanks for checking back with us, @PGrover.

 

Per the IRS website: 

 

"When an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death. 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 them only as social security and Medicare wages on the employee's Form W-2 to ensure that proper social security and Medicare credit is received. On the Form W-2, show the payment as Social Security wages (box 3) and Medicare wages and tips (box 5) and the Social Security and Medicare taxes withheld in boxes 4 and 6; do not show the payment in box 1 of Form W-2.

If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes.

 

Whether the payment is made in the year of death or after the year of death, you must also report the payment to the estate or beneficiary on Form 1099-MISC."

 

For more information about handling tax forms, check out this IRS guide: IRS Instructions.

 

For extra guidance with your books, I recommend consulting with your accounting professional. Your accountant can review your accounts and advise the best way to handle the funds. If you don't have an accountant, you can always use the Find an Accountant tool from our Resource Center. 

 

Please don't hesitate to let me know if there is anything else I can assist you with. Take care! 

 

 

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