Has the IRS ever audited you for not reporting your 1099-G Unemployment benefits? What happened?

The IRS will almost certainly know about this unreported income. States report all unemployment compensation they pay out directly to the IRS, so there will be a mismatch between what's in their system and what you reported on your return. What typically happens is the IRS will send you a CP2000 notice, which is basically a letter saying "we think you didn't report all your income." They'll calculate the additional tax you owe based on that unreported $6,800, plus interest from the original due date of your return, and possibly a penalty (usually around 20% of the additional tax). You have a couple options here. You can wait for the notice to arrive, which might take anywhere from a few months to a year after filing. Or you can be proactive and file an amended return (Form 1040-X) to report the income and pay the tax now. Filing an amendment shows good faith and might help reduce penalties, plus you'll pay less interest since you're handling it sooner. This isn't technically an "audit" in most cases - it's an automated document matching program. A true audit is more extensive and less common. Either way, this is a relatively routine issue that the IRS deals with all the time!

I went through almost the exact same situation last year and discovered taxr.ai which was honestly a lifesaver for me. I had forgotten to include a 1099-G for about $5,200 in unemployment and was stressing about what to do. I uploaded my tax documents to https://taxr.ai and it immediately flagged the missing 1099-G that wasn't in my return. The system showed me exactly how much additional tax I would owe and generated the amended return I needed to file. It was super straightforward and saved me from the anxiety of waiting for the IRS to catch it. Their document analyzer is really good at spotting these kinds of discrepancies between what the government has on file and what you actually reported. Especially helpful if you're worried about other potential mistakes you might have made.

Following up about taxr.ai - I decided to try it despite my initial skepticism, and I'm actually really impressed. I was in a similar situation with an unreported 1099-G from 2023, and the system immediately identified the discrepancy. It showed me exactly how the unreported unemployment income would affect my tax liability and generated all the paperwork I needed for my amended return. What really surprised me was how it found a couple of deductions I had missed on my original return that partially offset the additional tax I owed from the unemployment. The document analysis was much more detailed than I expected. Definitely worth checking out if you're in this situation or worried about other potential issues with your return.

I had a similar issue two years ago, but mine was worse because I completely forgot about $12,000 in unemployment. I tried calling the IRS for guidance but couldn't get through to anyone for WEEKS. It was beyond frustrating. I finally found https://claimyr.com which got me connected to an actual IRS agent in less than an hour. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with was surprisingly helpful and walked me through exactly what I needed to do to file an amended return. They even told me that handling it proactively before they sent a notice would likely result in lower penalties. Saved me so much stress compared to just waiting for them to find the error!

I have to eat my words about Claimyr. After my skeptical comment, I actually tried it because I was desperate to talk to someone at the IRS about a different tax issue (not unemployment related). I had been trying to get through on my own for over two weeks with no luck - just constant "all our representatives are busy" messages. The service connected me with an IRS agent in about 45 minutes. The agent was able to pull up my account and confirm exactly what I needed to do about my missing 1099 situation. For what it's worth, the agent told me that filing an amended return ASAP is definitely the right move rather than waiting for them to catch it. She said it shows good faith and can help reduce any potential penalties. Really glad I finally got through to get some definitive answers.

My sister didn't report about $4,300 in unemployment income in 2019 (totally forgot about it) and the IRS sent her a letter about 11 months later. They basically calculated what she should have paid, added interest and a 20% penalty, and gave her 30 days to either pay or dispute it. She called to set up a payment plan and they were actually pretty reasonable about it. The whole thing was nerve-wracking but not the nightmare scenario she was imagining. No audit, no major hassles, just had to pay what she owed plus some extra.

Does anyone know if the state will come after you separately for unreported unemployment on state taxes? Or does fixing it with the IRS take care of both problems?

I actually just received a CP2000 notice last month for unreported unemployment from 2022. It wasn't that bad honestly. The letter clearly showed what income they had on file versus what I reported. They calculated I owed about $1,400 more in taxes, plus around $300 in penalties and interest. I checked their math and it was correct, so I just paid it online through the IRS website and it was done. The whole process was pretty straightforward. My advice is to just fix it by filing an amended return now rather than waiting. The penalties just keep adding up the longer you wait.

I'm going through something very similar right now! I forgot to report a 1099-G for about $5,200 in unemployment benefits from last year. Reading through everyone's experiences here has been really helpful - it sounds like this is way more common than I thought. Based on what I'm seeing, it looks like being proactive and filing an amended return is definitely the way to go rather than waiting for them to catch it. Maya's breakdown of the penalties and interest really puts it in perspective - the 20% penalty plus accumulating interest makes waiting pretty costly. Has anyone here actually filed the amended return themselves, or did you end up using a tax professional? I'm trying to figure out if Form 1040-X is something I can handle on my own or if I should get help. The math seems straightforward enough but I don't want to mess it up and make things worse.