Form 1099-G, Certain Government Payments

IRS Definition

Federal, state, or local governments file this form if they made payments of:

  • unemployment compensation;
  • state or local income tax refunds, credits, or offsets;
  • reemployment trade adjustment assistance (RTAA) payments;
  • taxable grants; or
  • agricultural payments.

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Most Forms 1099-G are received for unemployment compensation or from state or local income tax refunds. If you itemized your deductions in the prior tax year, the state tax refund you received will be considered as income for this tax year. If you did not itemize in the prior year, your state tax refund is not considered income.

If you receive a Form 1099-G and do not report the amount shown on the form on your tax return, the IRS will likely send you a CP2000, Underreported Income notice. This IRS notice will propose additional tax, penalties and interest on this and any other unreported income. Learn how to handle an underreporter inquiry (CP2000).

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