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Tax bill coming on unemployment benefits

New IdentityTheft Scam

Mark Williams
 
| The Columbus Dispatch

A record number of tax forms will be going out this month to Ohioans who must pay taxes on unemployment benefits they received in 2020.

Some of those forms will go to workers who didn’t even receive unemployment benefits: The Ohio Department of Job and Family Services say some people who will get the forms may have been victims of identity theft.

The agency will issue 1.7 million 1099-G tax forms this month that show how much recipients received in benefits and how much income to declare when preparing tax returns.

The sheer number of forms reflects the enormous toll the pandemic has taken on Ohio workers. During the early days of the pandemic, the state’s unemployment rate jumped to 17.3%.

The agency doesn’t know how many people were affected by fraud, which has also afflicted other states. It could be in the tens of thousands, Job and Family Services officials say.

The agency warned in August that fraudsters were attacking a federally funded coronavirus pandemic program meant to provide unemployment benefits in Ohio and elsewhere to those who don’t typically qualify. It found that as many as a third of those claims could be fraudulent.

For Ohioans who believe their identity has been stolen and used to file a fraudulent claim, the agency has created an online portal at unemployment.ohio.gov. Individuals can click on the “Report Identity Theft” and complete the form.

Everyone who files a report with information about identity theft will receive a confirmation report. The agency then will investigate and, if necessary, issue corrections to the Internal Revenue Service.

Beyond that, the agency is urging any victim of identity theft to take action to protect themselves. That includes checking their credit scores and reports to see if there are problems. They also can visit OhioAttorneyGeneral.gov/IdentityTheft for educational resources.

Taxpayers shouldn’t ignore the 1099-G if they believe they received it in error, said Ted Johnson,  a tax- and litigation-support partner with accounting firm Parms + Co. in Columbus.

It’s going to come up as an issue with the IRS if taxpayers don’t report the problem to the state and get it resolved, he said.

“It’s better to deal with it on the front end than a year-and-a-half from now,” he said.

For those who accurately received the form, Johnson noted that money from unemployment benefits always has been considered taxable income. He said he understands those who say that’s unfair, especially workers who collected benefits for the first time in 2020 because of the pandemic.

“I am sympathetic. I do understand the challenges,” he said.

Many workers may be able to get a payment plan from the IRS if they can’t pay the tax bill all at once, or the tax bill may be small, depending on an individual’s deductions, he said.

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@BizMarkWilliams

Source: on 2021-01-14 13:56:15

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