Because of the pandemic, many more people filed for unemployment last year than in typical years. It must be reported as taxable income, so they are receiving a tax statement that may be unfamiliar to them. Due to an increase in fraud, some have received the statement even if they never applied for or received the government benefit. This makes it extra important to check your tax documents closely this tax season.
Unemployment benefits must be reported as gross income on your federal tax return. Those who received unemployment benefits should receive a Form 1099-G. It will show the taxable amount paid to you in Box 1 and how much was withheld in federal and state taxes in Boxes 4 and 11. If you received the benefit without having taxes withheld, you may owe taxes. For more information, visit www.irs.gov/UC.
If someone has used your identity to file a fraudulent claim, the 1099-G may be incorrect. The IRS reports that taxpayers who receive an incorrect form 1099-G should request a revised form from their state agency showing they did not receive these benefits. If the corrected form is not received in time, taxpayers should file an accurate tax return listing the correct amount received, not the incorrect amount on the form. The Kentucky Career Center answers 1099-G questions at https://kcc.ky.gov/Documents/FAQ%201099Gs.pdf.
It may be a different type of scam if you are overpaid unemployment benefits or if the benefits you never applied for show up in your account rather than the scammer’s. Receiving benefits you are not eligible for is another type of fraud, and the money must be returned. The scammer may contact you and try to pressure you or trick you into sending the money to them instead of to the proper authorities.
Report any type of unemployment fraud in Kentucky to [email protected] or 502-564-2387. You also can report identity theft to the Federal Trade Commission at IdentityTheft.gov, where you’ll also receive information about recovery. You can get additional identity theft information from the Kentucky Attorney General at https://ag.ky.gov/Priorities/Protecting-Kentuckians/Consumers/Pages/Identity-Theft.aspx.
You might consider placing a free, one-year fraud alert, an extended fraud alert, or credit freeze on your credit report. Note that these steps only prevent new accounts from being opened in your name. You can monitor your current accounts for fraud activity by checking your statements and reviewing your free credit reports from annualcreditreport.com.
More information on family financial education topics is available by contacting the Laurel County office of the University of Kentucky Cooperative Extension Service.
Educational programs of the Cooperative Extension Service serve all people regardless of economic or social status and will not discriminate on the basis of race, color, ethnic origin, national origin, creed, religion, political belief, sex, sexual orientation, gender identity, gender expressions, pregnancy, marital status, genetic information, age, veteran status, or physical or mental disability.