Identity Thieves Collect Unemployment — Victims Get Tax Bills

By Katherine Skiba   En español Published February 03, 2021

An 85-year-old woman in Boulder, Colorado, was upset and unnerved by a notice that she received in the mail on Jan. 27. It was a government form stating she received $2,322 in unemployment

compensation last year.

"Never in my life — never” had she sought or received jobless benefits, the woman tells AARP (she spoke on the condition that she would not be named). A professional who retired more than 25

years ago, in 1995, she would never dream of seeking unemployment benefits during her golden years. Astonished that a bogus application in her name was approved, she says having her

identity stolen left her sick to her stomach, gave her sleep troubles and made her stressed about what calamity involving her financial accounts could be next.

She is, unfortunately, part of a massive group of Americans whose identities were hijacked in 2020 by criminals filing fake claims for unemployment.

payments including unemployment compensation. Getty Images

What's next is critical: Victims are urged to tell officials in their states that they need a revised Form 1099-G, which lists amounts paid in unemployment and the federal income taxes

withheld on these payments. In Colorado a victim can do so using an online form to report an invalid 1099-G to the state Department of Labor and Employment.

The Internal Revenue Service (IRS), in a Jan. 28 announcement, made these key points:

States send Form 1099-G to both the taxpayer and the IRS to show what taxable income the states issued. Unemployment benefits are taxable.In cases of identity theft, a corrected Form 1099-G

showing zero unemployment benefits will help taxpayers avoid an unexpected federal-tax bill for unreported income. Those who are unable to obtain a timely, corrected form from their state

should still file an accurate tax return, reporting only the income they received.