Hey everyone, so spouse died in 2018, surviving spouse got a 2019 W-2 for deferred comp payment and RSU's liquidated. The company withheld taxes (not supposed to). If the company had not withheld taxes it is just a matter of putting the income on the return with a letter of explanation. Question is what do I do with the withholding the company has done in this case?
Thanks in advance!
"Deceased employee's wages.
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. Report the payment in box 3 (rather than as non-employee compensation). See the Example that follows. Enter the name and TIN of the payment recipient on Form 1099-MISC. For example, if the recipient is an individual beneficiary, enter the name and social security number of the individual; if the recipient is the estate, enter the name and employer identification number of the estate. The general backup withholding rules apply to this payment."
From:
https://www.irs.gov/instructions/i1099msc#idm140364700438320
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