YORKTOWN, Va. (WAVY) — The problems keep unfolding for Yorktown resident and business owner James Kelley.

“I have no problem paying taxes on $15,000, I just want to know where it’s at,” said Kelley, whose problem began with the Virginia Employment Commission. Now, you can add the Internal Revenue Service and Social Security to that list.

“Now I’m facing overpayment from Social Security, and penalties from the IRS on money that I have never seen a day in my life, and that’s not right,” Kelley said.

Kelley received a tax statement for $15,625 from the VEC early this year, one of several 10 On Your Side uncovered. But Kelley says he received “not one red cent, never” of the purported benefits in 2020.

Virginia unemployment benefits are exempt from state income tax, but are taxable on the federal level. The whole situation gets worse because Kelley and his wife are on social security.

“[The mistaken $15,625] takes us into a new tax bracket, and then we have to concern ourselves with a reduction in Social Security payments because we went over their threshold,” he said.

Kelley also has a small business, and the business tax deadline was not extended this year like it was for individuals.

“I’m already late, this being past the 15th of April,” Kelley said in a Wednesday morning interview.

10 On Your Side assisted Kelley in filing a fraud claim with the VEC on March 9. In addition to the claim itself, we notified VEC by email that same day, and have since followed up twice.

Kelley is now dealing with three government agencies trying to sort out the tangled mess.

“I’ve got the IRS looking for $15,000 and Social Security saying ‘Hey, you made too much money, buddy,'” he said, managing to laugh.

10 On Your Side will let VEC know, again, about Kelley’s case. The agency has come through in past cases and issued corrected benefit statements for people who faced the same dilemma.

If you have a problem with unemployment let us know at reportit@wavy.com.