Because final wages for deceased employees are not federal taxable (payment is being made in same year employee passed), do I have to set up a payroll item with the no fed tax, but taxable for S.S. and Med...how do I do that? Also, when the earnings are processed initially thru payroll and payable to the estate of the deceased, do I create a $0 net check, then reissue the net pay thru AP as 1099 eligible? The logistics are a bit unclear. I was told that as long as the tax indicator in the employee tax record says "do not withhold", that would take care of my tax issue, but, that is not going to prevent the wages from being included in the federal taxable gross, right?