She said she was left "frightened and surprised" as a text informing her she was officially dead popped up in the Maryland Motor Vehicle Administration's system.
Officials then informed Ms Paulino she could not renew her licence - before she received a letter from the US Internal Revenue Service describing her as a "deceased taxpayer".
Health insurance for the mother and her three children was cancelled, prompting a stream of medical bills and leaving her unable to get the inhaler she needs for her asthma.
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According to the representative, a funeral home tried to report someone else dead but got a digit wrong in the Social Security number, submitting Paulino's number instead.
The Social Security Administration told NBC4 Washington its records were highly accurate and that less than 0.33% of the more than three million death reports they received annually were later corrected - suggesting around 10,000 reports were wrong each year.