Did You Get a 1099-G?

A sad truth is, those who are looking to take advantage of people, or scam the system, will use all tools at their disposal, regardless of how much it hurts others. One of the ways people have been cheating the system since the pandemic started is unemployment fraud. For those who don’t remember our blog post from last May, unemployment fraud is when a scammer uses somebody else’s identity and falsely claims unemployment insurance. In many ways it’s the perfect crime. The government will usually make the first couple of payments before the claim is disputed, and the victim happily has their job, and doesn’t even know somebody has claimed to be them until it’s too late.

How late is too late? For many it’s when they receive a 1099-G and file their taxes. Unemployment income is income, and the IRS expects its cut. So what to do if there’s a 1099-G in your name when there shouldn’t be? The Internal Revenue Service (IRS) recently issued guidance for taxpayers who receive Forms 1099-G for unemployment benefits they did not actually get because of identity theft.

Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income.  

The IRS previously issued guidance requested by states on identity theft guidance regarding unemployment compensation reporting. No Forms 1099-G should be issued to those individuals the states have identified as ID theft victims.

Talking Points for Members when Filing Taxes

Tax season is upon us and as we know, it is not uncommon to be anxiously awaiting a tax refund, especially during potential economic turmoil. If your life changed quite a bit in 2020 — you got married, bought a house, had a baby, retired, sold a home — and you’re unsure of how that affects your tax situation, you may want to consult with a tax professional for advice.

Below are important tips to consider when filing 2020 taxes

  1. Direct deposit is a convenient and safe option to receive a tax refund quickly, rather than waiting for a check to be mailed. However, if a you choose direct deposit, providing the IRS with the correct account information is important.
  2. Always double-check the WCU routing number and your account number before filing your return. If you provide only the account holder name on your tax return, your refund will not be deposited into your account.
  3. Members should never authorize the deposit of a tax refund into an account on which they are not listed as an owner.
    1. You cannot be given access to funds in an account that is not in your name, which can lead to delays and/or loss of funds if the owner of the account will not reimburse you, or the funds are no longer available. This includes any tax preparer used.
  4. If you receive someone else’s tax refund in error, please contact us immediately and follow these IRS instructions.
  5. In an effort to combat fraud and identity theft, the IRS limits the number of direct deposits into a single financial account or prepaid debit card to three refunds per year. Taxpayers who exceed this limit will receive a notice and a refund check instead, which may take up to 10 weeks.

Steps to Ensure Your Tax Refund Goes to YOUR Account

  1. Locate the refund section of your tax return.
  2. Enter the Wauna Credit Union Routing Number: 323274209
  3. Enter your Wauna Credit Union Account Number. There should be no dashes, symbols, or letters in your Account Number.
  4. Before filing your taxes, double check that you typed the Routing Number and Account Number correctly.
  5. Never direct your tax refund to someone else’s account.
  6. File your return on time — this year’s deadline is: April 15, 2021.
  7. To check the status of your refund, go to www.irs.gov/refunds and select “Where’s My Refund?” You can also check the IRS2Go mobile app or call 800.829.1040.

Lost or Stolen Checks

If a member believes their tax refund check has been lost or stolen, please click to visit the IRS “Where’s My Refund” tool or call 800.829.1954. The tool provides the status of the refund and, in some cases, instructions on how to resolve delivery problems. It will typically have information about the member’s tax refund 72 hours after the IRS acknowledges receipt of the member’s e-filed return, or three to four weeks after the member mails a paper return.

Members in Delinquency

In some cases, a portion or all of a member’s tax return will not be delivered to the member, but rather allocated toward a delinquent amount owed by the member for such things as state income tax, back child support, or delinquent non-tax federal debts, such as a student loan. The Treasury Department’s Financial Management Service (FMS), which disburses IRS refunds, will deduct the delinquent amount from the member’s refund before any monies are disbursed by check or direct deposit. In such cases, the FMS provides a letter to the member explaining any offset amount, the agency receiving the payment, the address and telephone number of the agency, and amount of refund offset. Member’s wishing to dispute the debt, will have to do so with the agency listed on the notice, not the IRS.

IRS Errors

The IRS maintains a customer service line that members may call to speak to a representative regarding tax return errors. If the IRS has made an error that resulted in the member receiving the incorrect amount returned or no return at all, the member should contact the IRS directly to resolve the issue (800.829.1040). WCU is not responsible for resolving any errors made by the IRS.

Member Errors

The IRS warns members to be very careful when entering their account and routing numbers when they choose direct deposit on their paper or electronic return. In most cases, an error will result in a delay of payment since the IRS issues a paper check instead of the direct deposit. But an error may result in the direct deposit going into an account belonging to someone else. The IRS will automatically issue a paper check if the account and routing numbers do not pass the IRS’ validation check, or if WCU rejects and returns the deposit to the IRS. However, if the member enters the incorrect account and/or routing numbers, and the deposit is accepted, the member will have to work directly with WCU to recover the funds.

The information here is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Consult your tax, legal, or accounting advisors for further guidance.

Key Tax Preparation Tips to Cut Stress

Although it comes around every spring, tax season tends to inflict the same headaches year after year. To reduce your stress — and maximize your refund — it’ll help to stay organized and be aware of recent changes to the tax code.

For additional motivation to get on track, keep in mind that the average refund has been about $3,000 in recent years. Even if you don’t expect to get that much back, there are plenty of ways to put a refund to good use. But first, you’ll have to file your returns properly, taking advantage of any deductions you might qualify for. Here’s a look at where to get started.

Compiling the necessary information

For starters, you’ll need your W-2 form listing earnings and tax withholdings, which employers typically send out in January or early February. Be sure to have your Social Security number or taxpayer identification number available, as well as those numbers for any dependents you’ll claim. You’ll also need documentation of any income they may have had.

Affordable Care Act penalty

The 2010 Affordable Care Act ushered in one of the most significant tax law changes in recent years. It stipulates that if you didn’t have health insurance for more than three months in 2015 and didn’t qualify for an exemption, you may face a penalty.Portrait of businessman holding calculator

For tax year 2015, taxpayers who lack adequate insurance may be penalized at either 2% of a portion of their income or $325 per adult and $167.50 per child, to a maximum of $975 per family — whichever is higher. Those fees are set to increase in upcoming years, which means it’s a good idea to get insured as soon as possible.

Tax deductions reduce taxable income

Deductions reduce the amount of your income that you have to pay taxes on. Sit down and figure out whether the standard deduction or itemized deductions will work best for you. The former is a set amount that reduces your taxable income depending on your filing status; the latter lets you list qualified expenses separately, such as mortgage interest and local property taxes. If your itemized deductions add up to more than your standard deduction amount, go with that.

So what kinds of expenses can you deduct? Contributions to eligible organizations and interest on education loans are among the more well-known deductions you can take. Others, such as medical and home office expenses, aren’t as widely used for various reasons. Make sure to look into which of your expenses you can use to reduce your taxable income, which will probably increase your refund. Bear in mind that income limits and expense thresholds may limit these deductions or eliminate them entirely.woman-hand-smartphone-laptop

If you qualify to contribute to a traditional individual retirement account, or IRA, you may be able to shield up to $5,500 of income from taxes — plus $1,000 more if you’re 50 or over — by putting it in an IRA. You have until April 15 to make deductible contributions for the previous year. Withdrawals are subject to income tax, however.

Also, if you’re in a same-sex marriage, stay alert for further changes in the rules governing your tax status and other financial issues.

The bottom line

Completing your tax returns won’t be much fun, but it’s the first step in claiming a refund. Once you’ve filed your returns, you should expect to get what you’re due within three weeks — or in less than half that time if you ask for the money to be directly deposited to a savings or checking account. Just remember to compile all the essential paperwork before getting started, keeping an eye out for tax credits and changes to the tax code.

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