Paying Deceased Employees Kentucky Personnel Cabinet by alicejenny


									                           Procedure for Paying Deceased Employees

Wages paid to an employee after death are subject to different taxation than those paid prior to death. Wages paid
after death, but within the same year as the death, are subject to Social Security, Medicare, and Retirement (as
appropriate). They are not subject to Federal or State income taxes. A 1099 is generated for these wages by the
Finance and Administration Cabinet. Wages paid after the year of death are further not subject to Social Security or

Special wage types have been developed for paying wages after death. Using the appropriate wage type will ensure the
proper taxation and retirement contributions. The chart below provides the wage types and the Infotype used for each
one, including the subtype for payouts of annual and compensatory leave.

Please remember that there is no limit on the payout of annual leave to a deceased employee.

The timesheet for the period being paid as “wages paid after death” should reflect LNPA for scheduled hours up to the
termination date. If the PAN has not been processed by the time payroll runs, please complete the timesheet with
LNPA. If the timesheet reflects other paid time types, it will result in double payment. An IT0015 should be created for
the pay for the period (use WT9002 or WT9003, as indicated below), and quota corrections should be made for any
leave used and/or earned during the period.

Please also remember to change the name of the employee to “Estate of (name)” prior to making the payments. After
all payments have been made, it is important to change the name back to the employee name for W-2 purposes. The
name on the W-2 must match the name on file with the Social Security Administration.

The table below lists the wage types developed for payments after death.
    WT                       Description                    Infotype
   9002     Death Wages Curr Yr                         IT0015
   9003     Death Wages Prior Yr                        IT0015
   9004     Annual Death Curr Yr                        IT0416/1005
   9005     Comp Death Curr Yr                          IT0416/1002
   9006     Annual Death Prior Yr                       IT0416/1006
   9007     Comp Death Prior Yr                         IT0416/1003
   9008     Annual Death Curr Yr Retire 2008            IT0416
   9009     Annual Death Prior Yr Retire 2008           IT0416/
   9010     Comp Term Death Curr Yr Ret2008             IT0416/1010
   9011     Comp Term Death Prior YrRet2008             IT0416/1011
   9012     Annual Death Curr Yr Retire KTRS            IT0416/1012
   9013     Annual Death Prior Yr Retire KTRS           IT0416/1013

*Please note there are specific wage types for current and prior year annual and compensatory leave balance payments
for Retirement 2008 and KTRS. All others are under the ones for payouts that don’t designate the Retirement
system/type. For example, “reg” KRS (pre 2008), SPRS, and CERS fall under wage types 9004-9007.

                                                                                                                  Sept 2012

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