Many state government unemployment agencies use antiquated computer systems and are understaffed. A flood of pandemic-related unemployment claims triggered mass fraud If you're worried about future fraud under your identity, you can opt into the Identity Protection PIN program to get a unique six-digit number known only to you and the IRS to use when you file your tax return. ![]() You can also find instructions for claiming the exclusion on the IRS website.Īs for people who already filed 2020 returns and paid taxes on the first $10,200 in benefits, IRS Commissioner Charles Rettig said the agency is taking steps to issue automatic refunds.Įven if you suspect your identity has been stolen to claim unemployment benefits, you don't need to file an Identity Theft Affidavit, Form 14039, unless you e-file your federal return and it's rejected by the IRS because a return using your Social Security number has already been filed. Tax-preparation companies, including H&R Block and TurboTax, are working to update their software to help taxpayers claim this relief. People with modified adjusted gross incomes (AGI) of under $150,000 for all filing statuses are eligible for the exclusion. The American Rescue Plan excludes from federal taxation the first $10,200 in unemployment benefits collected in 2020. Exclusion of up to $10,200 in unemployment benefits A corrected form will also be sent to the IRS, so you don't need to notify the agency yourself. If your state agency doesn't respond in a timely manner, you should still file a federal tax return by the May 17 deadline and report only the income you did receive (unemployment, if anything, plus other compensation). Here's a list of the agencies in each state that handle taxes and unemployment benefits. In guidance released January 28, the IRS advised anyone who receives an inaccurate 1099-G to contact their state agency - not the IRS - to request a corrected form, including if the amount is $0. If you did get benefits for a period of time, double check that the amount reported on Form 1099-G is accurate. What to do if you get a 1099-G with unemployment benefits you didn't collectĭon't report any unemployment benefits as income if you didn't receive them for a valid claim you filed. ![]() These are the numbers you need to report on your tax return. In Box 4, you'll see the amount that was withheld for federal taxes, if any. You can quickly find the amount your state paid to your name in unemployment benefits in 2020 by looking at Box 1 on Form 1099-G. If you get Form 1099-G in the mail with your name on it reporting unemployment benefits you did not receive, then it's likely fraud. However, there is a temporary $10,200 exclusion for many Americans.įraudsters will often use another person's name and address to file a claim, but include a bank account they have access to to collect the money. Generally unemployment income is taxable at the federal level, so you have to report it on your tax return. At tax time, states mail Form 1099-G (Certain Government Payments) to the address associated with a claim, or make the form available online, so the taxpayer can report the income on their tax return. ![]() People apply for benefits through their state government and get paid by the state. ![]() Unemployment insurance is a joint state-federal government program. While many of those claims have come from people trying to recoup lost income and stay above water, not all of them are legitimate. Unfortunately, that meant go time for would-be fraudsters.Īround 76 million claims for unemployment have been made since last March. Tens of millions of Americans lost their jobs or reduced their work hours in 2020 because of the coronavirus pandemic.
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