A Quick Guide To Tax Form 1099-G

During tax time, you’ll likely have multiple forms to keep track of. One example is Tax Form 1099-G, sometimes called “Certain Government Payments” — and it may be less familiar than the classic W-2.

So what is this 1099-G? Who gets it and why? And perhaps most importantly, what are you supposed to do with it?

Here’s your quick guide to Tax Form 1099-G and what it means for your taxes.

Why Did You Get Form 1099-G?

If you got Form 1099-G for the first time or haven’t gotten one in a while, you might have some questions. Let’s take a closer look:

What Is This Form?  

Form 1099-G is called Certain Government Payments because it’s just that — documentation of money you received from the government. According to the Internal Revenue Service (IRS), this money can include:

• Unemployment compensation.
• State or local income tax refunds, credits or offsets.
• Reemployment trade adjustment assistance (RTAA) payments.
• Taxable grants.
• Agricultural payments.

If you receive the form, the government is telling you that you need to report this money on your state or federal income tax return.

Who Sends It?

A W-2 comes from your employer, while a Form 1099-G is sent by federal, state or local governments.

Who Gets It?

You’ll get Form 1099-G if you received any of the above payments from the government. Two common examples of income reported on a form 1099-G are unemployment benefits and previous income tax refunds.

What Else Should You Know?

Form 1099-G isn’t that different from any other IRS form. Just keep in mind that unemployment compensation and tax refunds can be considered “income” — which, in turn, impacts your taxable income overall.

There are some situations where you may receive a Form 1099-G, but the income reported is not taxable. Especially in the case of the recent special tax refunds or payments made by certain states related to the pandemic. The IRS provided guidance related to these payments issued in certain states and said the payments would not be taxable as they are payments related to general welfare and disaster relief. In some situations, the IRS also stated state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit.

If you receive a 1099-G reporting a state income tax refund and didn’t deduct state and local income taxes as an itemized deduction last year, then you don’t need to pay taxes on it even though you received a Form 1099-G.

How To Read Form 1099-G

Just about every tax form has a list of boxes with various dollar amounts. It’s easy to look at all those numbers and feel a little lost — so here’s a breakdown of Form 1099-G:

Payer Information

This section, located at the top left corner of the form, tells you which government body sent the tax form. That information can be beneficial if you’re wondering whether unemployment insurance or other income will impact federal income tax, state income tax, or both.

Box 1: Unemployment Compensation

Did you receive more than $10 in unemployment benefits from your state? If so, your total unemployment amount will appear in Box 1. You’ll add up all these numbers from every Form 1099-G you receive and list the total on the unemployment compensation line of your tax return. 

Tip: You don’t need to attach Form 1099-G to file your finalized taxes, but you should keep it for your records!

Box 2: State or Local Income Tax Refunds, Credits or Offsets

This box will be filled out if you got money back on your taxes — often through a refund, but sometimes through a credit (such as the Earned Income Tax Credit). You may also see an offset amount. You technically got this money as a tax refund, but it was applied to something else (such as past-due child support).

Keep in mind that you may not have to report this amount on your federal tax return. The situation depends on whether you took a federal deduction for paying certain taxes in a prior year.

Dates

You’ll see two boxes that indicate dates:

• A box near the top right states the calendar year for the form.
• Box 3 states the tax year during which you earned the income in Box 2. 

Use these dates to ensure payment and amount accuracy.

Other Payments

Form 1099-G doesn’t just cover unemployment benefits and tax refunds. You’ll see other boxes on Form 1099-G:

• Reemployment Trade Adjustment Assistance (RTAA) payments.
• Taxable grants.
• Agriculture payments.
• Market gain. 

These boxes on the form are often empty — but if they have a number reported, you’ll likely need to include this info on your state or federal income tax return.

Federal and State Income Tax Withheld

In some cases, you may have chosen to have federal income tax withheld from your unemployment benefits. That means you’ve already made a tax payment — similar to the way federal taxes may be withheld from a paycheck from an employer. This amount will be recorded in Box 4. Similarly, several boxes near the bottom of the form contain information about any withheld state taxes.

1099-G and Other Unemployment Tax Tips

You know the basics. You may even have the form in hand. Are you ready to file?

Here are a few more tips and pointers:

Look Out for 1099-G Fraud

It’s imperative to look out for fraud when filing your taxes — especially if you receive a Form 1099-G. That’s because some groups submit fraudulent claims to receive unemployment benefits (often related to the pandemic). Here are two examples of what that might look like:

• You get a Form 1099-G for payment you never received.
• The amount in one or more of the boxes — particularly Box 1 — exceeds what you actually received.

According to the IRS, you shouldn’t report these incorrect amounts on your tax return. Instead, visit the IRS Identity Theft and Unemployment Benefits page, which explains what to look for and how to file your taxes in the meantime.

Be Careful on State Workforce Agency (SWA) Websites

Unfortunately, 1099-G forms aren’t the only way for fraud to sneak into your tax life. You may also stumble upon a fake unemployment benefits website, which will attempt to steal your personal information and use it to commit identity theft. The Department of Justice is aware of these issues and warns that you should always double-check links and websites before providing any information.

Know What To Expect

Some governments still send paper copies of tax forms including 1099-G. Others make these documents available online, which means you need to download them yourself. It’s important to know how you’re getting your tax information so you don’t miss deadlines waiting for papers that won’t be mailed to you.

There are also some states that don’t charge income tax, which means you’ll file your unemployment payment on your federal taxes but not your state return. If you have questions about these rules, TurboTax can help you make sure you’re reporting your income correctly.

Get The Facts

If you’re receiving unemployment insurance, understand how this will impact your income and taxes beyond Form 1099-G. Our Unemployment Center has plenty of great information to help you navigate those financial ups and downs.

You can also check out the TurboTax blog to learn more about refunds, credits and offsets. For example, did you know that not all tax credits are refundable, which means only certain ones can show up on Form 1099-G? 

Simplify Unemployment and Other Taxes With TurboTax

How much tax do you pay on unemployment benefits? Do you have to report all 1099-G data on your state taxes? How do refunds, credits and offsets impact your tax payment?

The truth is that no matter what financial situation you’re in, you’ll likely have questions like these (and a whole lot more). 

Don’t worry about knowing these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.