Unemployment benefits surge in 2020 could cause tax headaches in 2021, Kansas officials warn

Unemployment benefits

The Kansas Department of Labor has set up a special call center this tax season to deal with an influx of questions related to Form 1099-G, which is meant to track taxpayers' unemployment benefits. Photo credit Kansas News Service.

Unemployment benefits and claims spiked in 2020 during the pandemic as the American economy shut down for long stretches to try to contain the spread of COVID-19.

That also led to an increase in cases of alleged unemployment fraud, and that now could create headaches for some Kansas taxpayers, including Johnson Countians.

Here is what you need to know:

If you took unemployment, you will receive a 1099-G form

Each year in January, the Kansas Department of Labor prepares and mails IRS Form 1099-G to taxpayers who received unemployment benefits during the previous calendar year.

Form 1099-G provides the total amount of unemployment compensation paid during the previous year, and if elected, will show state or federal income taxes withheld, according to KDOL.

Those tax forms are being sent to Kansans who legitimately received unemployment benefits during 2020 to help establish income tax liability. However, victims of identity fraud related to unemployment benefits could also get these forms.

If you did not receive unemployment benefits but still got a 1099-G form

Kansans who did not apply for or receive unemployment benefits paid out by KDOL may still receive a 1099-G this tax season.

That’s because their identity or personal information may have been used by someone else in order to fraudulently obtain such benefits.

KDOL says victims of identify theft will not be charged with income tax liability for those benefit amounts.

If you have a question about or want to dispute a 1099-G form you received

In response to the influx of tax-related questions about Form 1099-G, the Kansas Department of Labor has opened up a specialized tax-related call center to help Kansans with questions about the 1099-G and other unemployment-related matters.

Companies or individuals who have been the apparent victim of identity theft and ended up receiving a Form 1099-G for unemployment benefits they failed to receive may call (785) 291-6059 to receive assistance.

Kansans can also receive an updated 1099-G by filling out a request on the labor department’s UI Self-Service Portal under “Dispute my 1099.” Select the “I want to dispute my 1099” box to get started. Make sure to state the reason for the dispute on the Unsworn Declaration as “identity theft.”

Additionally, any Kansans who first learned their identity was stolen when they received the 1099-G form can visit https://www.dol.ks.gov/fraud and submit a fraud report. For more information on fraudulent claims and how to resolve them, click here.