In 2020, the COVID-19 pandemic caused reduced work hours, layoffs, furloughs, and permanent job loss for millions of workers. Many of these individuals applied for unemployment benefits through state agencies last year to make up for their loss of income. 

As a result, criminals have taken this opportunity to use others’ identities to file and receive unemployment benefits. However, unemployment benefits are taxable income. The states send a Form 1099-G to recipients and the IRS to report the compensation and any withholdings. 

Taxpayers who receive a Form 1099-G for benefits they did not apply for or receive should contact the issuing state agency to report the fraudulent activity and request a revised form. It is important to note that if you are unable to get a corrected form in time, you should still file your tax return, reporting only the income you received. Be sure to save all your documentation and records of communication with the state agency to obtain a revised form.

If you have any questions or concerns regarding suspected fraudulent activity, contact your AHP professional.

Addition Resources:

• IRS website
• Publication 525, Taxable and Nontaxable Income
• Get an identity protection PIN (IP PIN) to prevent against taxpayer identity theft.

Any accounting, business, or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough analysis of specific issues, nor a substitute for a formal opinion, nor was it written to be used to avoid tax related penalties.