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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 identify 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.
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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….
