How does a 1099-G work?

By | February 26, 2014

A 1099 is a form that a company sends you (and a copy to the IRS) reporting money they paid you during the year. For instance your bank sends a 1099 for any interest they paid you on a savings account. A 1099G is just a version of that form that you receive from a government agency. If you receive state unemployment benefits the state will send you a 1099G so you can report the earnings on your tax return.


What is Form 1099-G?

Form 1099-G provides important tax information that must be reported on your federal income tax return. Form 1099-G reports the amount of refunds, credits, and offsets of state income tax during the previous year. This amount may be taxable on your federal income tax return if you claimed the amount as an itemized deduction on your federal income tax return last year.


How does a 1099-G work?

When you receive a refund, offset, or credit of state or local income tax, that amount appears in box 2 of the 1099-G form. However, you don’t necessarily have to report this amount on your federal tax return or pay additional taxes. You only need to report it if you took a deduction for paying those taxes in a prior year. Box 3 of the form will indicate the relevant tax year of the form 1099-G.


Other Boxes on 1099-G:

  • Boxes 4, 10a, 10b and 11 report information about the federal, state and local income taxes withheld from any government payments you received.
  • Box 5 reports certain trade adjustments.
  • Box 6 shows any taxable grants you receive from government agencies.
  • Box 7 shows any payments you receive from the Department of Agriculture.
  • Box 9 shows the market gain on certain types of loans only available to farmers.