What if Form 1099-G shows UI benefits, but your client never applied? - Spidell

What if Form 1099-G shows UI benefits, but your client never applied?

With an estimated $11 billion-plus in California unemployment insurance fraudulent claims filed in 2020, the chance of at least one of your clients being the victim of UI fraud is quite high.

A taxpayer who receives a Form 1099-G from the EDD but never received unemployment insurance (UI) or pandemic unemployment assistance (PUA) benefits is likely a victim of fraud. The EDD is directing taxpayers to report the fraud by:

Once the fraud has been reported, the EDD will investigate the case as identity theft. This process requires identity forms to be sent to the individual in order to validate that the unemployment claimant was an imposter. The EDD will issue a corrected 1099-G when the investigation is completed. The EDD has not indicated how long this might take.

Although California does not tax UI or PUA benefits, the IRS does. Reporting zero UI or PUA benefits or a lower amount than that reported on the 1099-G will delay the processing of the federal return.

Due to the extremely high volume of UI claims filed in 2020, the IRS has given the EDD until the end of February to process the 2020 1099-Gs, so taxpayers may not receive the 1099-G until late February or early March.

For more information, see:


Attend Spidell’s Plan While Preparing Tax Returns webinar on February 26 and find out how to reduce your clients’ tax bills by planning for this year’s tax changes. Click here for details.