Many Americans applied for unemployment benefits in 2020 due to job loss or reduced hours resulting from the COVID-19 (coronavirus) pandemic. Unfortunately, scammers also took advantage of the high number of unemployment applications to fraudulently collect benefits. In the most common scam, an identity thief applied for and received unemployment benefits using someone else’s social security number (SSN).
Generally, the person whose identity was stolen does not know that a bogus application was filed in their name. Now, many of these scam victims have received a Form 1099-G from their state governments, incorrectly stating that they received unemployment benefits payments during 2020. In reality, the payments went to the scammer.
If you receive an inaccurate 1099-G, you will likely not be responsible for paying taxes on any incorrectly reported benefits. The IRS advises you to take the following steps:
- Contact the state agency that issued the 1099-G and explain that you did not receive the benefits shown on the form. Request that a revised, correct 1099-G be sent to you.
- If the state agency cannot provide a corrected 1099-G in a timely manner, you may file your tax return and report only income that you actually received, regardless of what the inaccurate 1009-G shows.
Note that requesting a revised 1099-G is a critical action to take, as it will help prevent complications caused by an incorrect IRS tax or penalty assessment. Even if the corrected form does not reach you before you file your return, the revised information will eventually reach the IRS and your tax bill will be adjusted accordingly.