With over 1.2 million unemployment claims in 2020, more Hoosiers than ever will be including unemployment income for the first time when filing their 2020 individual income tax return. The Indiana Department of Revenue (DOR) is reminding individuals that unemployment benefits are taxable income on both state and federal returns.
All unemployment recipients who opted for paper mailing will receive Form 1099G in the mail that includes the total taxable income the Indiana Department of Workforce Development (DWD) issued in a calendar year. Those unemployment recipients who opted to go paperless or did not receive Form 1099G in the mail, can access their Form 1099G information through DWD’s Uplink system. Any unemployment recipient who may not have received a Form 1099G can also use the Uplink system to obtain their required information.
Benefits received from the following federal programs implemented in 2020 are considered taxable income:
• Federal Pandemic Unemployment Compensation (FPUC)
• Pandemic Emergency Unemployment Compensation (PEUC)
• Pandemic Unemployment Assistance (PUA)
• Lost Wages Assistance (LWA)
Information on these programs can be found on the U.S. Department of Labor’s website.
Remember, if applying for the Indiana Earned Income Tax Credit, unemployment income is not included in the earned income calculation. However, taxpayers may be able to reduce or even eliminate any state tax due on their unemployment compensation through the unemployment compensation deduction. More information on this can be found in the IT-40 booklet.
Fraudulent Claims & Identify Theft
If customers find a fraudulent unemployment claim has been filed in their name, they need to visit the DWD’s website immediately to file a report. Their website can also help taxpayers learn how to spot identity theft and provides information on how to contact the Indiana State Police, the Federal Bureau of Investigations, the Federal Trade Commission and other agencies to report these claims.
If you are ready to file your taxes with DOR and believe you are a victim of identity theft, follow these steps:
1. Fill out the IRS ID Theft Affidavit.
2. Email the IRS ID Theft Affidavit and a copy of the fraudulent 1099G to DORITCInfo@dor.in.gov.
3. File your taxes and be sure to include all valid sources of income.
For more information on unemployment claims and filing state taxes, visit DOR’s website at dor.in.gov/ and click on the “Unemployment Benefits and Taxes” button.