What is Form 1099-G, Certain Government Payments?

If you received certain government payments, you’ll want to pay attention to an IRS form called the 1099-G. This informational return helps you report how much money you received from the government to the IRS come tax time.

Follow along as we cover 1099-G form details, including what it is used for, how to use it, why it’s important, where to find it, and other details to make sure you comply with state and federal reporting requirements.

What is a 1099-G?

Federal, state, and local governments send Form 1099-G to taxpayers for certain payments.

 It is most commonly issued for:

• Unemployment compensation (Funded by FUTA employment security payments) and
• State or local income tax refunds, credits, or offsets.

Other less-common government payments reported on Form 1099-G include Reemployment Trade Adjustment Assistance (RTAA) payments, taxable government grants, agricultural payments, and market gains on certain loans.

If you receive any of these payments, tune in as we cover the specifics. The payment may or may not be taxable depending on the specific situation.

What does 1099-G show?

Each box on Form 1099-G corresponds to specific types of payments or important information. Here’s a breakdown of the key boxes and what they typically report:

• Box 1: This box reports the total unemployment compensation paid to you.
• Box 2: This box reports refunds, credits, or offsets of state or local income tax you received.
• Box 3: Indicates the tax year the amounts in Box 2 come from, if they are from a tax year other than the current tax year.
• Box 4: Indicates federal income taxes withheld.
• Box 5: If you received any payments for reemployment trade adjustment assistance, the total will be reported in this box.
• Box 6: This box reports any taxable grants you received from a federal, state, or local government.
• Box 7: This box reports any payments you received from a federal or state program to help you with crop or livestock losses.
• Box 8: This checkbox indicates if the amount in Box 2 is for trade or business income.
• Box 9: If you had any market gain from certain loans or agricultural programs, it’s reported in this box.
• Box 10a: The state from which the payment is issued.
• Box 10b: The payer’s state identification number.
• Box 11: Indicates state income taxes withheld.

Additionally, the form includes spaces for the payer’s and recipient’s information.

Tax Form 1099-G for unemployment compensation

If you draw unemployment income from the state government, the unemployment benefits are subject to tax.

As mentioned above, your unemployment benefit total for the tax year appears in Box 1 on your 1099-G. If federal income tax is withheld from your benefits, the amount will appear in Box 4. If you’re required to file taxes, you’ll include the amount from Box 1 as part of your income on Form 1040.

Using 1099-G form example for unemployment compensation:

Jane was laid off from her tech job in January 2024. She applied for state unemployment benefits that same month. In February, her unemployment claim was approved. She started receiving $2,000 per month in unemployment compensation. She received this amount for six months until she found a new job.

Jane chose not to have taxes withheld from the benefits. In total, Jane received $12,000 in unemployment benefits:

$2,000 (per month) x 6 (months) = $12,000

Jane will get a Form 1099-G from the state unemployment office for reporting 2024 unemployment compensation of $12,000. She will need to use this information for tax filing to report the income received and pay taxes on the $12,000 as she didn’t withhold taxes.

Have questions about unemployment and taxes? Visit our Unemployment Tax Resource Center for help with unemployment-related topics and tips on how to file your Form 1099-G for free.

IRS Form 1099-G for state tax refunds, credits, or offsets

Another common reason for receiving a 1099-G is due to an overpayment of state taxes. This payment may or may not be taxable to you. If the state issues you a refund, credit, or offset of state or local income, that amount will be shown in Box 2 of your 1099-G form.

The amount you received from the government for a refund, credit or offset isn’t taxable if you claimed the standard deduction on your previous year’s return. But if you itemized deductions on Schedule A on your previous year’s return, all or part of the refund amount is taxable in the year you receive the refund if you also deducted state and local income tax.

Let’s walk through a 1099-G refund example:

In 2023, Maria had $3,000 withheld from her paycheck for state taxes. For that tax year, she itemized and deducted the $3,000 state income from her federal income taxes.

After filing her state tax return, she realized she only owed $2,500. In 2024, Maria’s state issued her a $500 refund on the overpaid amount of tax and sent her Form 1099-G to report the payment.

Because she received a 2023 tax benefit from deducting those taxes on her federal return, the state refund was taxable in 2024. She refers to the Form 1040 Instructions, line 10 for more information.

Other payments covered by Form 1099-G

While unemployment compensation and overreported state income are the most common reasons you’d get Form 1099-G, there are a few other scenarios for receiving the form. Other scenarios where you’d get the form include:

• Reemployment trade adjustment assistance (RTAA) payments (Amount shown in Box 5.)
• Taxable grants received from federal, state, and local governments (Amount shown in Box 6.)
• Taxable payments from the Department of Agriculture (Amount shown in Box 7.)
• Market gains on Commodity Credit Corporation loans (Amount shown in Box 9.)

Where to get Form 1099-G

If you’ve received government payments in the last year, you can generally expect Form 1099-G to be mailed to you from most states. In some cases, you may need to download the form from your state Department of Revenue’s website or other designated page. The location depends on the type of payment received.

Do I need to report 1099-G on taxes?

You should always report 1099-G income on your tax return. If you omit this income, you could face a penalty for not reporting it on your return. If you receive Form 1099-G and don’t report the total amount shown on your tax return, the IRS could send a CP2000, Underreported Income notice. This IRS notice shows additional tax information, penalties, and interest on underreported income.

Did you receive a 1099-G form for unemployment income that was never paid to you?

If you were a victim of unemployment identity theft and received Form 1099-G (with an amount in Box 1) by accident, you should:

• Contact the 1099-G issuer for a corrected form showing $0 benefits received.
• File your return reporting the income you actually receive.
• Check your state Department of Revenue website to see if the state issued additional directions.

Get help filing Tax Form 1099-G

If you want more guidance on Form 1099-G or your state or federal tax return, let H&R Block help. Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.