If you received a 1099-G in the mail recently, and weren’t expecting one, chances are your social security number was stolen in order for a thief to claim unemployment benefits in your name. If you received a 1099-G and did not receive any unemployment benefits yourself, the IRS has published clear instructions on what to do.
You do NOT need to file form 14039, Identity Theft Affidavit, unless someone filed a tax return using your social security number. You would discover this after attempting to e-file a tax return and that return is rejected by the IRS. (Whenever a return is rejected, you will receive a code listing the reason).
What you should do instead is contact the appropriate state’s unemployment agency and report the fraudulent claim. Request a new 1099-G with “0” listed as unemployment benefits received. If, however, you do not receive a corrected 1099-G in a timely fashion, the IRS states that you should file your federal tax return only reporting income that you actually received. In other words, do not report those unemployment benefits.
Finally, request an Identification Protection PIN. This is a 6-digit number issued annually by the IRS that is unique to you. Future tax returns will only be able to be e-filed if the correct IP PIN is entered into the 1040. By requesting a IP PIN, you protect yourself from future fraudulent tax returns filed in your name. You can initiate an IP PIN application here.
Incidentally, the IRS now allows any taxpayer to request an IP PIN, it is no longer solely for those affected by identity theft. If you have any concerns that your social security number might be used fraudulently in the future to file tax returns in your name, this is one proactive step you can take to protect yourself.