Millions of Americans received unemployment insurance (UI) benefits in 2021 due to pandemic-related business cutbacks and shutdowns. Unfortunately, scammers took advantage of this situation to fraudulently collect UI payments.

In the most common version of UI fraud, scammers applied for benefits using another person’s name and taxpayer ID number. The scammer then collected benefit payments without the affected person’s knowledge. Many of the perpetrators of this scheme belong to organized crime rings, and have sophisticated technology to cover their tracks.

Recipients of 2021 UI payments should receive IRS Form 1099-G (Certain Government Payments) from their state governments. If you get a 1099-G form but were not paid UI benefits in 2021, immediately report the issue to the state agency that sent the form. If you did receive benefits in 2021, carefully check the amount shown on your Form 1099-G against your tax and banking records. If the form shows more benefits than you actually got, report this at once.

Reporting incorrect 1099-G forms ensures that you will not be charged tax on benefits you did not receive. It also helps authorities track down scammers and crime syndicates. The U.S. Department of Labor website has a list of email addresses and phone numbers that taxpayers can use to report UI identity theft in every state (link below).

If you are unsure how to report UI benefits on your tax return, a tax professional can help.

Reporting UI Fraud: https://www.dol.gov/agencies/eta/UIIDtheft