Form 1099-G: Certain Government Payments — Your 2025 Guide

If you've received unemployment benefits, a state tax refund, or certain other government payments, you might be looking at Form 1099-G and wondering what it means for your taxes. This guide breaks down everything you need to know in plain English.

What the Form Is For

Form 1099-G is an information return that federal, state, or local government agencies use to report specific types of payments they made to you during the year. Think of it as the government's version of a receipt—it shows both you and the IRS what taxable income you received from government sources.

The most common types of payments reported on Form 1099-G include:

Unemployment compensation (the biggest one most people receive)
State or local income tax refunds from your previous year's tax return
Reemployment Trade Adjustment Assistance (RTAA) payments for workers affected by foreign trade
Taxable grants from government programs (like energy conservation grants)
Agricultural subsidy payments from the USDA
Commodity Credit Corporation (CCC) loan payments

Here’s the important part: you don't file Form 1099-G with your tax return. Instead, you use the information from it to report income on your Form 1040. The government agency that paid you sends one copy to you, one to the IRS, and possibly one to your state tax department—so the IRS already knows about these payments and expects to see them on your return.

When You’d Receive It (Late or Amended Forms)

Under IRS rules, government agencies must send you Form 1099-G by January 31 of the year following the year you received the payments. So if you collected unemployment in 2024, you should receive your Form 1099-G by January 31, 2025. You can receive it by mail or electronically if you've opted for electronic delivery through your state's system.

If Your Form Is Late or Missing

If you haven't received your Form 1099-G by mid-February:

Check your state unemployment agency's website (most offer electronic access).
Use their automated phone line to request a copy or view your information.

If Your Form Is Incorrect or Amended

Pay close attention if you receive an incorrect or corrected Form 1099-G. Agencies issue a corrected form (marked “CORRECTED”) when they discover an error in the amount reported. This can happen when:

Fraud occurred (someone filed a claim using your identity).
Benefits were overpaid and later recouped.
The agency reported the wrong year or amount.

If your form lists benefits you never received, it’s a red flag for identity theft—report it immediately to your state unemployment agency.

After You’ve Filed Your Return

If a corrected Form 1099-G arrives after you’ve already filed your return and it changes your tax liability, you’ll need to file Form 1040-X (Amended Return).

Key Rules for 2025

Understanding the reporting thresholds is crucial. Government agencies must issue Form 1099-G when:

Unemployment compensation or state/local tax refunds reach $10 or more
RTAA payments and taxable grants reach $600 or more
Any amount is subject to federal backup withholding

When State Refunds Are Taxable

Not all state tax refunds are taxable:

If you didn’t itemize last year (took the standard deduction), your refund isn’t taxable.
If you did itemize and deducted state taxes paid, your refund is taxable because you received a tax benefit.

New Rules for Family Leave Benefits

Under Revenue Ruling 2025-4, states with paid family and medical leave programs must report these benefits on Form 1099-G. You may see this for the first time on your 2025 form.

Excluded Payments

The IRS announced that lead service line replacement payments from certain municipal water programs are not taxable and should not be reported on Form 1099-G.

Step-by-Step: What to Do with Your Form 1099-G

Step 1: Verify All Information

Check that your name, SSN, address, and amounts are correct. Make sure the reported figures match your records.

Step 2: Understand Each Box

Box 1 — Unemployment compensation → Report on Schedule 1, Line 7
Box 2 — State/local tax refunds → Report only if you itemized; on Schedule 1, Line 1
Box 3 — Tax year the refund relates to
Box 4 — Federal tax withheld → Claim on Form 1040, Line 25b
Boxes 5–7 — RTAA payments, grants, or agricultural payments → Report as income

Step 3: Gather Your Records

Compare your 1099-G to bank statements or payment stubs—especially for unemployment benefits (common fraud area).

Step 4: Use It to File Your Return

Enter information manually or import it into your tax software.
If using a preparer, provide all copies.

Step 5: Keep It for Your Records

Retain your Form 1099-G for at least three years in case of audit.

Common Mistakes and How to Avoid Them

1. Failing to Report Income

Unemployment and certain refunds are taxable. The IRS receives a copy and matches it against your return—failure to report can lead to a CP2000 notice, penalties, and interest.

2. Reporting Refunds When You Took the Standard Deduction

If you did not itemize, do not report Box 2 as income.

3. Ignoring Fraudulent Forms

If you get a 1099-G for benefits you never received:

Contact your state unemployment agency.
File Form 14039 (Identity Theft Affidavit).
Report the fraud to the Department of Labor.

4. Double-Reporting Income

Report your unemployment income once only—on the proper line, not again as “other income.”

5. Missing Withholding Credits

If Box 4 shows federal tax withheld, claim it on Form 1040, Line 25b—many taxpayers forget and overpay.

What Happens After You File

Once you file, the IRS matches your return to the 1099-G data from agencies.

If Everything Matches

You’ll hear nothing—your return is processed normally, and any refund arrives on schedule (typically within 21 days for e-filed returns).

If There’s a Mismatch

You may receive a CP2000 notice proposing changes. This can happen if:

You didn’t report income the IRS has on record.
A fraudulent 1099-G was filed in your name.

You can respond, provide documentation, and dispute incorrect information. If needed, include a corrected 1099-G or identity theft affidavit.

If You Missed Claiming Withheld Tax

If you forgot to claim Box 4 withholding, file Form 1040-X to get the refund. The IRS won’t fix this automatically.

Future Implications

Unemployment compensation can affect:

Earned Income Tax Credit (EITC) eligibility
Health insurance subsidies
Estimated tax payment calculations for the following year

FAQs

Q1: Is unemployment compensation really taxable?

Yes. It’s fully taxable at the federal level because it replaces wages. Submit Form W-4V to your state agency to request withholding and avoid a surprise bill.

Q2: I took the standard deduction last year. Do I still need to report my state tax refund?

No. If you didn’t itemize deductions, your state refund isn’t taxable income.

Q3: I received a Form 1099-G for unemployment benefits I never got. What do I do?

That’s likely unemployment fraud.

Contact your state agency for a corrected form.
File Form 14039 (Identity Theft Affidavit).
Report to the Department of Labor.

Q4: When should I expect to receive my Form 1099-G?

By January 31. If you don’t have it by mid-February, check your state’s online portal or contact them directly. You must still report the income even if the form is missing.

Q5: Can I have taxes withheld from my unemployment benefits?

Yes. Submit Form W-4V to your state unemployment agency. Box 4 on your 1099-G will show the amount withheld, which you claim as a credit on Form 1040, Line 25b.

Q6: My Form 1099-G shows the wrong amount. How do I get it corrected?

Contact the issuing agency (usually your state unemployment or revenue department) and request a corrected form marked “CORRECTED.” If it won’t arrive in time, file your return with the correct figures and keep documentation.

Q7: Do I need to attach Form 1099-G to my tax return?

No. You do not attach it—just keep it for your records. The IRS already receives a copy.

Final Note

This guide reflects IRS instructions and regulations current as of 2025. Tax laws can change, so always verify details at IRS.gov/Form1099G or consult a qualified tax professional for personalized advice.

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