Tax Forms Reporting Unemployment Benefits Sent to Recipients

Benefits are subject to federal taxation

By Associated Press

HELENA — Montana’s Department of Labor and Industry has mailed tax forms to people who received unemployment benefits last year because they are subject to federal taxation, the agency said.

The agency offered people the option to withhold federal taxes from some of the benefits. But withholding was not available for payments from three federal pandemic-related supplemental unemployment programs, including one that offered an extra $600 a week early in the pandemic, said Lauren Lewis, agency spokeswoman.

Unemployment benefits are exempt from state taxes in Montana.

People who receive a form 1099-G but did not file for unemployment benefits are likely the victim of identity theft. The agency has a fraud hotline at (406) 444-0072.

Those who have questions about their 1099-G form were also given a number to call. Additional staffers have been assigned to answer those questions, Lewis said.

Montana made nearly $1.2 billion in unemployment payments in 2020, compared to $107 million in 2019, Lewis said.

Montana confirmed nearly 1,800 fraudulent unemployment claims in 2020, but does not know how much money was paid on those claims, Lewis said The state also blocked more than $18 million in fraudulent payments but does not know how many claims were involved, she said.

Montana’s seasonally adjusted unemployment rate was 4.4% in December, down from 4.6% in November. Its unemployment rate was 3.5% last February, before the coronavirus was confirmed in the state, and reached as high as 11.9% in April as businesses were shut down to prevent the spread of the virus.

Since March 14, the state has processed over 205,000 claims for unemployment, representing 45.6% of the workforce eligible for the insurance program.

As of Jan. 16, 18,304 people were receiving unemployment benefits, representing 4.1% of all eligible employees in the state, the agency said.

The Department of Labor and Industry has also reinstated a one-week waiting period before unemployment benefits are paid.

At the beginning of the pandemic, Montana waived the waiting period because federal funding was available to pay benefits immediately. That money is no longer available. The change affects unemployment claims beginning Jan. 31.

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