Millions of taxpayers were affected by the pandemic through job loss or reduced work hours. Some taxpayers applied for and received unemployment compensation from their state.
Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves.
By law, unemployment benefits are taxable. States issue Form 1099-G, which shows the total unemployment benefit amount paid to the taxpayer in the calendar year. States should not issue Form 1099-G to taxpayers they know to be victims of identity theft involving unemployment compensation.
Taxpayers whose identities may have been used by thieves to steal unemployment benefits and who receive an incorrect Form 1099-G should contact the issuing state agency to request a revised form. If they’re unable to get a timely, corrected form from states, the IRS urges such taxpayers to file an accurate tax return claiming only the income they actually received. They should also save any documentation they have regarding their attempts to receive a corrected form from their state agency.
Taxpayers do NOT need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. Form 14039 should only be filed if the taxpayer’s e-filed return is rejected because a return using the same Social Security number already has been filed.
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