Death Benefits

The Death Benefits are.

payments to a deceased employee's surviving spouse or children, which are tax-free up to a total of $5,000 (i.e., $5,000 automatic exclusion). Any excess over $5,000 may be considered gift income and hence taxable. This exclusion does not apply to a decedent's accrued salary. Former IRC (check if this IRC provision is current here) § 101(b)(1).