Yes, you must take certain steps as an employer like filing a W-2 form for a deceased employee to compensate their estate for unpaid work time. Keep in mind that there is some nuance to the following steps. How you distribute employee wages for deceased individuals depends on your state’s regulations. Generally, you should:
Obtain Proof of an Employee’s Death
Request an employee’s official death certificate before you remit payment for their final wages. Order copies from their mortuary. It should be available one or two weeks after the employee’s death.
Determine Who Receives the Final Wages
Confirm your state’s laws on whether final wages go to an employee’s estate or to a family member. Follow up by contacting the appointed representative of an estate if applicable.
Record and Report Any Outstanding Payments
If your business compensated an employee in the same year after the date of their death, you need to record and report any of these outstanding payments. Types of payments can include:
- Any accrued wages
- Vacation pay
- Additional compensation
Payments that you made within the same year require employers to withhold Social Security and Medicare taxes. Do not report payments that you made after the year of death on Form W-2. Do not withhold Social Security and Medicare taxes.
Factor in Any Tax Considerations
End-of-year deaths may mean that you pay final wages in the following year. In these cases:
- Do not file Form W-2
- Do not withhold or pay employment taxes
- File a 1099 form to report the final employee wages
People Also Ask
- Do I need to mark or note “deceased” on a W-2 form? – No, because Form W-2 does not have a specific box to mark for a deceased individual. Simply make sure that their Social Security number and compensation are accurate.
- What if I need to correct a W-2 form for a deceased employee? – If you reported wages or taxes incorrectly on a W-2 form, you can file a Form W-2c for a deceased employee.
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This article was updated on Dec. 21, 2025 to keep its information as fresh as possible. We update this article every six months, before and after tax season, to keep it up to date with regulatory changes.