Greg's Corner

How the unemployment scams could affect your taxes

As we have posted previously on numerous occasions, unemployment scams have been a major problem in our country since the pandemic started. As we’re sure you’re aware of, overseas scammers have been applying for unemployment benefits using stolen identities. The majority of these identities were taken from major data breaches where major corporations had their customers’ data exposed. Employment benefits have been stolen from people who are both employed and unemployed. Nationwide, states have paid billions of dollars in fraudulent unemployment claims collectively.

Now that it’s tax season, even more taxpayers are finding out they’ve had fraudulent claims filed in their name. As unemployment benefits are taxable income, many taxpayers all over the country are being surprised with 1099-G forms. Think of the 1099-G form as a W2 for unemployment. But again, the problem is that many of these taxpayers never filed for unemployment.

If you receive a 1099-G form and did not file for unemployment, you need to contact a number of agencies to get the matter corrected. First, you would need to contact your state’s unemployment agency to report the fraud. You’ll also need a corrected 1099-G from your state that reflects you collected $0 in unemployment to correctly file your tax return. Do not claim the fraudulent benefits on your tax return.

It’s recommended that you do not hesitate in getting a corrected 1099-G form. You could potentially miss the tax deadline of April 15th if you wait too long. While you can file for an extension, you should try to get your return filed as soon as possible to avoid identity thieves filing a fraudulent return in your name.