Unemployment Fraud & Your Taxes

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With the COVID-19 pandemic shutdown, taxpayers across the country saw fraudulent claims for unemployment under their name. Criminals were using stolen identities and personal information to file for unemployment benefits. Unemployment benefits are taxable income and so having a claim for unemployment benefits can complicate your taxes.

If you received a Form 1099-G for 2020 unemployment compensation that you did not file for or receive, you need to take the following steps to report the fraud. You must first contact the state agency that issued you the form and report the fraud. You can ask the state to issue a corrected 1099-G. they will need time to investigate your fraud complaint and make any corrections.

Once you have reported the fraud, you should file your federal and state tax return reporting only the income you have received, even if you haven’t received the corrected 1099-G. You can also file an identity theft complaint with the U.S. Department of Justice’s National Center for Disaster Fraud.

If you believe or know that you have been a victim of fraud, you should check your credit report for signs of additional fraud and consider putting in a credit freeze or credit fraud alert through credit bureaus.  Not reporting the fraud and not claiming the unemployment benefits could lead to trouble down the road. It’s important to make sure you file your return correctly

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