If you received a Form 1099-G for unemployment benefits in 2020, you should immediately verify that the amount reported matches the amount of benefits you received. There may be a variance, or you may have received a Form 1099-G showing unemployment benefits though you never filed an unemployment claim.
Scammers took advantage of the COVID-19 pandemic by filing fraudulent claims for unemployment compensation using stolen personal information. The scammers received the money from these claims instead of the individuals whose information was used.
If your Form 1099-G for unemployment benefits does not match the amount of benefits received, you should immediately take the actions described in an IRS statement:
- Contact the issuing state agency to request a revised Form 1099-G showing that you did not receive part or any of the benefits reported. Have your Form 1099-G, actual benefits received, and driver’s license before calling or going online.
- Waiting to file your tax return until you receive the corrected Form 1099-G will help avoid a tax notice from the IRS for unreported income. If you cannot obtain a corrected form before you need to file your tax return, you should still file an accurate tax return and report only the unemployment income you received.
- You do not need to file Form 14039, Identity Theft Affidavit, with the IRS regarding an incorrect Form 1099-G. This form is only used if an e-filed return is rejected because a return with the same Social Security number has already been filed. However, you may request an Identity Protection Pin (IP PIN) from the IRS if you want to protect your identity when filing your Federal tax return.
- Some states also recommend filing a claim with the FTC or state law enforcement, as well as taking steps to review your credit report and set up fraud alerts.
You should only be responsible for paying taxes on the actual benefits received once the state issues a corrected Form 1099-G.
Though identity theft is disconcerting, Barnes Dennig is here to help our clients navigate the tax implications. If you believe you may have been a victim of identity theft related to unemployment compensation, please contact your Barnes Dennig team so that we can report the correct amount on your tax return. We’re here to help.