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My husband had an agreement to work "under the table" for a Realtor while receiving unemployment benefits. My husband benefits ran out in December. This Realtor sent a 1099 reporting this income in February. My questions are: What are the penalties for committing this fraud? Would it be better to contact the EDD before we file his income tax? and finally, will they give us a chance to pay back any overpayment before there is a threat of jail?