Mysterious 1099 tax form? You may be a victim of identity theft

Thousands receive 1099's showing unemployment benefits
Tax filing
Posted at 10:14 AM, Feb 08, 2021
and last updated 2021-02-08 13:38:04-05

This is W-2 and 1099 season when companies send you tax statements for what you earned last year.

But check those statements carefully. Some people are receiving 1099 forms saying they earned unemployment benefits when they never filed for unemployment.

Joe McFarland is struggling to understand what's been showing up in his family's mail.

His mother, long retired, received a 1099 form claiming she received thousands of dollars in unemployment last year from her state.

"She got 1099 from unemployment," McFarland said. "But she's 87 years old and hasn't worked in years."

But as if that wasn't enough trouble, he says, "yesterday my wife got one, too."

It shows she received $11,000 in unemployment benefits in 2020.

Only problem: his wife was gainfully employed and never filed for help.

"No, she never applied for it, never earned anything," he said.

What these forms mean

Unfortunately, these forms are not fakes in most cases. And they are certainly not a joke.

According to state unemployment officials, if 1099 includes your name, address, and last four digits of your Social, it probably means someone filed for unemployment under your name.

Thomas Betti, a spokesman for Ohio's Job and Family Services, says a good chance your Social Security number was stolen in a data breach.

"They are likely a victim of identity theft," he said.

And it is not just in one state. It turns out people all over the country are receiving 1099 forms from all different states.

Betti says if you receive one, you should go to your state's unemployment website immediately and fill out a fraud report.

The state can then send a corrected 1099 to the IRS that shows you did not receive benefits."We will send them a corrected 1099 form that says zero," Betti said.

In the meantime, Betti says, you should not report it on your 1040 tax form, or the IRS will assume you received that money.

McFarland thinks it's outrageous that someone can file for benefits under your name. But they can and do.

Finally, this is one scam where you don't just want to rip up or shred the form because a copy is on the way to the IRS.

And unless you have it corrected, the IRS will want you to pay taxes on the money that went to a scammer.


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That said, many folks are wondering what’s in the bill and how it might affect them. Here’s a recap of some of the major tax provisions in the new tax bill and how they may impact you.

Increased Standard Deduction: The new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.

Increased Child Tax Credit: For, families with children the Child Tax Credit is doubled from $1,000 per child to $2,000. In addition, the amount that is refundable grows from $1,100 to $1,400. The bill also adds a new, non-refundable credit of $500 for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000.

Personal and Dependent Exemptions: The bill eliminates the personal and dependent exemptions which were $4,050 for 2017 and increased to $4,150 in 2018. State and local taxes/Home mortgages: The bill limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax deductible. The bill also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law.

Health Care: The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out-of-pocket medical expenses can be deducted from the current law floor of 10% to 7.5% for 2017 and 2018. So for 2018, you can deduct medical expenses that are more than 7.5% of your adjusted gross income as opposed to the higher 10%.

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