Scam Alert: You Could Find Out If You Were the Victim of Unemployment Fraud This Tax Season

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A rise in unemployment benefits during the COVID-19 pandemic has led to a similar rise in unemployment fraud, mainly due to a surge in identity theft. The good news is, Americans worried that they are the victims of unemployment fraud can find out for sure by keeping their eyes out for a suspicious tax form.

Unemployment Fraud: Thieves Use Fake Job Ads To Collect Benefits
Learn: The Effect of Stimulus and Increased Unemployment Payments on the Economy in 2022

The form — called Form 1099-G, Certain Government Payments — is issued by various government agencies. Among other things, it lists the total unemployment compensation recipients received over the course of a year, which is considered taxable income and should be included on federal tax returns.

You could be a victim of unemployment fraud if you received a 1099-G form showing wrong information. It might include unemployment benefits you never received or a larger amount of unemployment compensation than you actually got. In this case, fraudsters likely stole your identity and collected the unemployment benefits themselves.

If you determine that you’ve been the victim of unemployment fraud, the first thing you need to know is that you don’t owe taxes on the benefits. You’ll want to file your returns as usual but without the wrong 1099-G information. You also should move quickly to report the fraud and protect your financial information.

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“By the time the fraudster has applied for unemployment insurance, who knows what else they used your identity for,” Michele Evermore, a senior policy advisor for unemployment insurance at the U.S. Department of Labor, told CNBC.

You can report the theft to the agency that issued the 1099-G, which in most cases will be your state unemployment agency. The U.S. Department of Labor has this directory you can use to find the right agency and contact information. The agency will then issue an amended tax form and update the record with the IRS on your behalf, CNBC noted.

See: 7 Ways You’re Accidentally Committing Tax Fraud
Find: 23% of Americans Were Victims of Credit Card Fraud Last Year: How To Protect Yourself

Another step you can take is to report the identity theft online at this USA.gov site.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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