The midfielder has been in the Black Country on Monday to continue talks having first met with Jackett last Friday, coming after Wanderers triggered a reported £750,000 release clause in his contract at Bramall Lane.
The Blades are desperately keen to keep hold of the influential 24-year-old, who did not feature in their defeat at Brentford on Saturday, and are prepared to offer an improved salary.
But McDonald appears to have shunned the proposition and will now complete a medical at Molineux, hopefully wrapping up the switch by the middle of this week.
Speaking after Wanderers' 4-0 win over Gillingham on Saturday, Jackett said: "We are in talks and working away but a deal is some way off being complete and isn't quite finished yet.
"I know it's come out quite early in the press. I'm not going to deny it (our interest) but we haven't signed Kevin McDonald and it's an ongoing process at present that we hope we can conclude."