Have you been a victim of unemployment insurance fraud schemes in 2020 and/or 2021? According to the U.S. Department of Labor’s Inspector General, approximately $89 billion in unemployment compensation was lost in 2020 alone due to fraud.
There are ways to protect yourself.
- If you are a victim of fraud, report it to the Rhode Island Department of Labor (DOR) and Training,
- If you were a victim of unemployment compensation fraud involving benefits from other states, use the U.S. Department of Labor link which has contact and other information for all states.
- If your social security number has been compromised and used to file a return, your accountant can file U.S. Form 14039 (“Identity Theft Affidavit”) if your electronically filed return is rejected.
- Any taxpayer who was a victim of fraud should have received Form 1099-G for unemployment compensation. However, many did not, while others received forms from multiple states. Because this scam may affect your 2021 return, and your 2020 return, your accountant should file tax returns reporting only the actual income received (excluding any fraudulent claims), regardless of whether a corrected Form 1099-G has been issued.
- All taxpayers (even victims of fraud) should consider an IRS Identity Protection PIN. It’s never too late to get a PIN, as your personal information could be used for additional criminal activity. Taxpayers who can verify their identities, can obtain a PIN to protect their Social Security numbers.
- All taxpayers should take steps to protect their credit and other actions outlined by the Federal Trade Commission (FT). The information is available on the U.S. Department of Labor link.
- All employers should respond promptly to notices from the state(s) about employees filing jobless claims.
For information about the federal tax treatment of unemployment benefits, please visit: https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation.
For information about the Rhode Island tax treatment of unemployment benefits, please visit: http://www.tax.ri.gov/Advisory/ADV_2021_28.pdf.