Question

An employee received his paycheck on Friday and died on Saturday prior to cashing the paycheck. What, if anything, should the payroll department do?

A. Reissue the check to the employee's estate/beneficiary.
B. Reissue the check without the federal income tax withholding.
C. Reissue the check with no tax withholding.
D. Nothing, the check was received by the employee.

Answer 1

The payroll department should reissue the check to the employee's estate or beneficiary following proper legal procedures. Tax withholdings should be maintained as originally calculated because they reflect the tax liability at the time of earning.

Step-by-step explanation:

When an employee passes away after receiving a paycheck but before cashing it, the company's payroll department has a responsibility to handle the situation appropriately. Legally, any earned wages become part of the deceased person's estate. The correct course of action would be for the payroll department to reissue the check to the employee's estate or beneficiary. This is to ensure that the earned compensation is properly distributed according to the laws governing the estate of the deceased. Therefore, option A - Reissue the check to the employee's estate/beneficiary is the appropriate choice. It is important to retain any tax withholdings on the check since these were liabilities incurred while the employee was still alive.