2020 unemployment compensation exclusion FAQs — Topic F: Victims of unemployment fraud and identity theft

These updated FAQs were released to the public in Fact Sheet 2022-39 PDF, December 2, 2022.

Q1. I received an incorrect Form 1099-G for unemployment benefits I did not receive and didn't report the fraudulent unemployment compensation income on my tax return. Will the IRS attempt to add it back then apply the exclusion? (updated June 25, 2021)

A1. No, we won't make any adjustments to correct unemployment compensation if fraudulent unemployment compensation was paid under your name and you didn't report it as income on a tax return you already filed.

You should report fraud to the state workforce agency that issued the incorrect form.  For more information, please see Identity Theft and Unemployment Benefits.

Q2.I received unemployment compensation but didn't claim the exclusion for up to $10,200 on the 2020 federal income tax return I filed. If I reported to the IRS that I was a victim of identity theft, when will the exclusion adjustment be completed if I'm eligible for it? (added June 25, 2021)

A2. Identity theft is when someone uses stolen personal information to file a tax return claiming a fraudulent refund. If you reported to the IRS that you're a victim of tax-related identity theft and your case remains open, the exclusion adjustment won't be made until your identity theft issue has been resolved.

Q3.I received unemployment compensation but didn't claim the exclusion for up to $10,200 on the 2020 federal income tax return I filed. If I suspect that my exclusion adjustment is delayed because I'm a victim of tax-related identity theft but have not reported my identity theft issues to the IRS yet, what can I do to speed up the refund from the exclusion adjustment? (added June 25, 2021)

A3. Tax-related identity theft is when someone uses stolen personal information to file a tax return claiming a fraudulent refund. If you believe you're a victim of tax-related identity theft, and haven't reported the identity theft issue to the IRS, you should notify the IRS by filing a Form 14039, Identity Theft Affidavit PDF through www.identitytheft.gov or by filing the Form 14039 by paper. You won't receive your refund from the exclusion adjustment until the identity theft issue can be resolved. For more information about identity theft, please go to our Taxpayer Guide to Identity Theft.