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  • Unemployment Insurance Benefits (UI)
  • State Disability Issues (SDI)
  • Worker Compensation Issues
  • EDD Overpayments
ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – DID YOU GET A 1099-G FROM THE EDD FOR U.I. BENEFITS YOU NEVER RECEIVED?
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ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – DID YOU GET A 1099-G FROM THE EDD FOR U.I. BENEFITS YOU NEVER RECEIVED?

By Robert S. Schriebman 2020

Introduction

Unemployment Insurance (UI) benefits are taxable income and must be included on your federal income tax returns. Recipients of UI benefits receive Form 1099-G from the EDD. Because of scammers, some people are receiving 1099-Gs for benefits they never received (“Certain Government Payments”). If you are a victim, how do you report the bogus 1099-G on your income tax return even though you did not receive any or all of the stated benefits? On January 28, 2021 the IRS issued press release IR-2021-24 dealing with this problem. This article will discuss the press release and what to do if you are a victim.

Press Release IR-2021-24

COVID-19 had wide ranging impact and rarely in a positive way. Many people lost their jobs or had their hours reduced. Those workers negatively impacted by the pandemic applied for and received unemployment compensation from the EDD. The IRS Code states that these benefits are taxable income, and must be reported on Form 1040.

Scammers Abound

Scammers also took advantage of COVID-19 by filing fraudulent UI claims using stolen personal information gathered from people who had not filed claims – yet. Unfortunately, these fraudulent claims were paid to the thieves. However, the EDD’s system, unaware of the thefts, routinely issued Form 1099-G to the innocent people whose identities were stolen. What to do?

  1. First thing the IRS press release instructs is NOT to file Form 14039, Identity Theft Affidavit. This form should be filed ONLY if a taxpayer’s e-file return is rejected because the same Social Security number has already been filed.
  2. Contact the EDD and inform them that you have been issued a bogus 1099-G and that you did not receive the stated benefits. (People are having a tough time reaching the EDD, so this option may not be workable.)
  3. File an accurate tax return reporting only the income you actually received. Consider attaching to your return a corrected 1099-G showing zero UI benefits or the benefits you actually received.

Conclusion

Unemployment compensation is taxable income and is reported on Form 1099-G. The IRS advises that starting in January 2021 benefit recipients will be receiving Form 1099-G from the agency paying the benefits. The 1099-G as well as the W2 should be attached to your filed 2020 federal tax return. If you are the victim of this type of identity theft, you should attach the corrected 1099-G to your return. If you received no benefits, the corrected 1099-G amount should be zero.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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