In recent weeks, state unemployment departments have mailed Form 1099-G to recipients of unemployment benefits received during 2020. Unfortunately, many recipients of these forms never received unemployment benefits but were the victims of scammers filing fraudulent claims using stolen taxpayer information.
If you receive a Form 1099-G you believe is fraudulent, the first course of action is to report the suspected fraud to your state department of labor. Many states have set up specific pages on their websites to report an incorrect Form 1099-G. Other states have dedicated phone numbers to call and report your claim. After investigation, the state will issue a corrected 1099-G showing $0 in benefits received. It is vital to receive this corrected form to avoid being hit with an increased federal tax liability. Unemployment compensation is considered taxable income on your federal return.
According to an IRS release on January 28, 2021, “taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.”
If you have received an incorrect Form 1099-G and need additional help, or would like assistance with tax preparation, planning, or submission, please contact a PYA executive below at (800) 270-9629.