Form 1099-G reports government payments you received

Form 1099-G is a tax document that reports money paid to you by a government agency during the year. The IRS requires these agencies to send you a copy and file one with the tax agency so your income is recorded. You will receive a 1099-G if you got unemployment benefits, state tax refunds, federal tax refunds, agricultural payments, or other government information payments that the agency is required to report.

The form arrives by January 31 of the year after you received the payment. For example, if you got unemployment in 2023, you will receive the 1099-G in January 2024. The document shows the total amount paid to you in each category, broken down by type of payment.

Not all government payments trigger a 1099-G. Social Security, Supplemental Security Income (SSI), Veterans benefits, and most welfare payments do not appear on this form. The agencies that do issue 1099-Gs are limited to specific programs: state unemployment insurance, state and federal tax refunds, agricultural payments, and a few others set by federal tax law.

Key Takeaways

  • Form 1099-G reports government payments like unemployment benefits and tax refunds that you must report on your tax return.
  • You receive the form by January 31 for payments made in the prior year, and the IRS receives a copy at the same time.
  • Unemployment benefits shown on 1099-G are fully taxable income unless you meet specific conditions that allow you to exclude part of it.
  • If you received a 1099-G but did not actually get the payment, or the amount is wrong, contact the issuing agency to request a corrected form.
  • You must report the income from your 1099-G on your tax return even if you do not receive the form.

What payments show up on a 1099-G

The form has separate boxes for different types of government payments. Box 1a shows state unemployment benefits. Box 1b shows federal unemployment benefits (these were issued during 2020 and 2021 as pandemic relief). Box 2 shows state income tax refunds. Box 3 shows federal income tax refunds. Box 5 shows agricultural payments. Box 6 shows taxable grants. Each box lists only the payments that explore to you.

Unemployment is the most common reason people receive a 1099-G. If you collected state unemployment insurance during the year, the state labor department will issue the form showing the total amount. Federal Pandemic Unemployment Compensation (FPUC), which was the extra $600 per week paid in 2020 and $300 per week in 2021, also appears on the form if you received it.

Tax refunds appear on 1099-G only if you received a refund from your state income tax return or from a prior-year federal return. A refund from your current-year federal return does not trigger a 1099-G because the IRS already has that information.

How unemployment on 1099-G affects your taxes

Unemployment benefits are taxable income. You must report the full amount shown in Box 1a on your federal tax return, and it counts toward your total income for the year. This can push you into a higher tax bracket or reduce tax credits you would otherwise receive, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit.

However, there is a partial exclusion for certain unemployment benefits. If you received unemployment in 2020 or 2021, you may be able to exclude up to $10,200 of those benefits from your taxable income. This exclusion applies only to those years and only if your modified adjusted gross income (MAGI) is below $150,000. You claim this exclusion on your tax return using Form 1040 or the form your tax software provides.

If you received unemployment in other years, no exclusion is available. The full amount is taxable. Some people choose to have taxes withheld from their unemployment checks when they receive them, which reduces the amount owed at tax time. You can check your pay stubs or the 1099-G itself to see if withholding was taken.

Correcting errors on your 1099-G

If the amount on your 1099-G is wrong, or if you received a form for a payment you never got, contact the agency that issued it. For unemployment, that is your state labor department or workforce agency. For tax refunds, contact the state revenue office or the IRS, depending on which refund the form reports.

The agency will investigate and issue a corrected form (called a 1099-G with a corrected indicator) if an error is found. This corrected form will be sent to you and the IRS. If you have already filed your return, you may need to file an amended return once you receive the corrected form.

Do not ignore a 1099-G you believe is wrong. The IRS receives a copy of the form, and if the amount on your return does not match the form, the IRS will send you a notice. It is easier to correct the problem before filing than to deal with an IRS notice afterward.

Reporting 1099-G income on your tax return

You report 1099-G income on Form 1040, the main federal income tax return. Unemployment benefits go on Line 5a. State and federal tax refunds go on Line 1 (as part of your total income, though some of it may not be taxable depending on your situation). Agricultural payments and other 1099-G income go on Schedule 1, which attaches to Form 1040.

If you use tax software, the program will ask you to enter the amounts from your 1099-G, and it will place them in the correct locations automatically. If you file by paper, you will write the amounts in the boxes shown in the form instructions.

You must report the income even if you did not receive the 1099-G form. The IRS has a copy, and your return will be checked against it. If the amounts do not match, the IRS will contact you. Reporting the income yourself prevents delays and penalties.

When you do not receive a 1099-G

If you received a government payment that should have generated a 1099-G and you did not receive the form by February 15, contact the agency that made the payment. They can issue a replacement or tell you whether one was sent to an old address. You can also request a transcript from the IRS showing what 1099-Gs they have on file for you.

If the agency confirms they issued the form but you never got it, ask them to reissue it. Keep a record of your request in case the IRS later questions why your return does not show a 1099-G they received.

You are still required to report the income on your return even if the form never arrives. If you know the amount, report it. If you do not know the exact amount, contact the agency to find out what they paid you.

State tax refunds and the 1099-G

State income tax refunds appear on Box 2 of Form 1099-G. However, you do not automatically owe federal tax on a state refund. You only owe tax on the refund if you itemized deductions in the year you paid the state tax. If you took the standard deduction, the state refund is not taxable.

This is because you can only deduct state and local taxes (SALT) if you itemize. If you did not itemize, you did not get a tax benefit from paying the state tax in the first place, so the refund is not taxable income. Your tax software or tax preparer will handle this calculation for you based on your filing status and deductions.

Keep your 1099-G with your tax records. If the IRS ever questions your return, you will need to show that you reported the refund correctly.

Frequently Asked Questions

Do I have to pay taxes on unemployment benefits?

Yes, unemployment benefits are fully taxable income. You must report the amount shown on your 1099-G on your federal tax return. The only exception is if you received unemployment in 2020 or 2021 and your income was below $150,000, in which case you may exclude up to $10,200 of those benefits.

What if I received a 1099-G but the amount is wrong?

Contact the agency that issued the form when ready. For unemployment, call your state labor department. They will investigate and send you a corrected form if an error is found. Do not file your tax return until you have the correct amount, or file an amended return once you receive the correction.

Is a state tax refund on my 1099-G taxable?

Only if you itemized deductions in the year you paid the state tax. If you took the standard deduction, the refund is not taxable. Your tax software will determine this automatically based on your return information.

What if I never received my 1099-G by February?

Contact the agency that issued it and ask for a replacement. You can also request an IRS transcript to see what forms they have on file for you. You must still report the income on your return even if the form does not arrive.

Do I need to attach my 1099-G to my tax return?

No. You report the amounts from the form on your return, but you do not send the form itself to the IRS. Keep it with your records in case you need to prove the income later.