Wages paid after an employee's death in the calendar year after their death are taxable for which categories?

Wages paid after an employee's death in the calendar year following their death are not taxable for Social Security (SS), Medicare, Federal Unemployment Tax Act (FUTA), or Federal Income Tax Withholding (FITW). This aligns with IRS guidelines indicating that wages paid after an employee's death should be treated differently for tax purposes.

When an employee passes away, any wages earned but not paid at the time of death are typically subject to regular withholding. However, if those wages are paid in the year after the employee's death, the payments do not incur the usual taxes because they are considered to fall outside the standard taxable income for Social Security and Medicare. Consequently, this means that neither Social Security nor Medicare taxes need to be withheld on those posthumous wages. Similarly, since these payments are not classified as earnings from current work, FITW and FUTA would also not apply.

Overall, the correct understanding reflects the IRS's intention to alleviate the tax burden on the deceased employee's estate in this specific context.