We are heading into tax filing season and the IRS is seeing an uptick in taxpayers receiving form 1099-G even though they never filed for unemployment during 2020 and the COVID-19 Pandemic. If you or any of your employees received the form yet never filed, identity theft is likely and someone may have received benefits fraudulently in your name. If you are aware of an identity theft situation here are some steps to take to lessen the impact and rectify the situation as soon as possible.
Contact the IRS, FTC, Consider a Credit Lock
First and foremost, contact the IRS as well as the Federal Trade Commission and your state’s revenue department. File a report. Check your free credit report immediately and consider looking into an identity guard service. You will want to ensure your social security number has not been used fraudulently. If it has, you may want to consider locking down your SS number. You will have major limitations on many items that require data, such as loans, new jobs, etc., but this is not permanent and will better protect you and your identity for the future.
File 2020 Taxes Accurately
The IRS will still want you to file your taxes. File them reporting ONLY the revenue received. Contact the agency that sent you the 1099-G form and request a revised 1099-G that shows ZERO unemployment benefits. You might not receive it before filing your taxes as state offices are overwhelmed with these requests in the first quarter of the new year, but you will receive one and once you do, keep it in a safe location.
It is important to note that this type of unemployment identity theft is different than discovering someone filed taxes under your name and took your return. If that occurs, you must file a Form 14039 and the IRS will flag your account, help resolve the case, and give you a special PIN to use when filing in the future.
Avoiding Identity Theft
There are a few basic ways to avoid identity theft in the future:
- Create strong passwords online with two-factor authentication.
- Shred ALL financial paperwork.
- Check your credit report annually.
- Never give your SS number out over the phone.
- The IRS will NEVER contact you UNLESS you have started a claim with them first.