Are a deceased employee's wages exempt from Kansas tax, and does Kansas impose an estate or inheritance tax on them?

Plain-English summary

A taxpayer asked whether an employee's wages are exempt from Kansas tax when the employee dies. The Department separated two different questions:

• Estate/inheritance tax: Kansas does not impose any inheritance or estate tax on a decedent's assets or estate — including wages.
• Income tax: Any wages the employee earned before death are subject to Kansas income tax, whether the employer pays them before or after the employee's death.

So the wages are not "exempt" — there is simply no Kansas death tax, while the ordinary income tax on earned wages still applies.

What this means for you

Employers and payroll

Wages earned by an employee before death remain subject to Kansas income tax even if you pay them out after the employee dies. Handle the Kansas income tax on those final wages as you normally would; there is no Kansas estate or inheritance tax to layer on top.

Families and estates

Kansas does not tax the decedent's assets through an estate or inheritance tax. But final wages the person earned are still Kansas taxable income, reportable on the appropriate return.

Tax preparers

Two separate systems are in play: Kansas has no estate or inheritance tax, but earned wages are Kansas taxable income regardless of whether they are paid before or after death.

Common questions

Q: Does Kansas tax a deceased person's estate?
A: No. Kansas imposes no inheritance or estate tax on a decedent's assets or estate.

Q: Are final wages paid after death taxable in Kansas?
A: Yes. Wages earned before death are subject to Kansas income tax whether paid before or after death.

Q: Are the wages "exempt" because the employee died?
A: No. There is no death-based exemption; the ordinary income tax on earned wages still applies.

Q: Does this ruling apply to me?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others, though it shows how the Department reasons.

Citations and references

• Kansas imposes no inheritance or estate tax on a decedent's assets or estate (as stated in the ruling).
• Wages earned by an employee before death are subject to Kansas income tax whether paid before or after death (as stated in the ruling). The ruling does not cite a specific statute section.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2016-009

Original ruling text

Private Letter Ruling

Body:

August 5, 2016

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

XXXXXXXXXX

Re: Kansas Tax

Dear XXXXX

Your correspondence of July 25, 2016, has been referred to me for response. Thank you for your inquiry.

By your e-mail you have requested our advice regarding Kansas tax. Specifically, your e-mail states:

Are an employee's wages exempt from KS State tax upon death?

In response to your inquiry, please be advised that if your question is whether Kansas imposes an inheritance or estate tax on an employee's wages the answer is "no". Kansas does not impose either an inheritance or an estate tax on any assets of a decedent or their estate.

On the other hand, if your question is whether an employee's wages are subject to income tax upon death the answer is "yes". Any wages earned by an employee prior to their death are subject to Kansas income tax whether paid by the employer prior to or after the time of the employee's death.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

JW:jw

NOTE: This opinion letter is based solely on the facts provided in your request for advice. If material facts or information were not disclosed this letter is null and void. This letter will be revoked without further action by the Department if the statutes, administrative regulations, published revenue rulings, or court decisions that materially affect this opinion are changed.

Date Composed: 09/16/2016 Date Modified: 09/16/2016

Table 1

| Ruling Number: | P-2016-009 |

Table 2

| Tax Type: | Individual Income Tax |
| Brief Description: | Taxation of Wages Upon Death |
| Keywords: | |
| Effective Date: | 08/05/2016 |
| Approval Date: | 08/05/2016 |