Form 1099-G: Certain Government Payments (2011) — Complete Guide

Form 1099-G shows certain payments you received from federal, state, or local agencies in 2011 that may be taxable. Agencies file it with the IRS and send you a copy by January 31, 2012. You don’t file the form yourself, but you must use it to report any taxable amounts on your 2011 federal return.

What the form reports

You might receive Form 1099-G if, in 2011, you received any of the following:

• Unemployment compensation (Box 1).
• State or local income tax refunds/credits/offsets (Box 2).
• Reemployment Trade Adjustment Assistance (RTAA) payments (Box 5).
• Taxable grants from government programs (Box 6).
• Agricultural payments (Box 7) and market gain on Commodity Credit Corporation (CCC) loan repayments (Box 8).
• Federal income tax withheld (Box 4) on any of the above.

Who sends it? The paying agency. They also file Copy A with the IRS, so the IRS will match it to your return.

When sent?

• To you: by Jan 31, 2012 (for 2011 payments).
• To IRS: by Feb 28, 2012 (paper) or Apr 2, 2012 (e-file).

Minimum amounts that trigger a form

• $10 or more: unemployment; state/local tax refunds.
• $600 or more: RTAA/ATAA, taxable grants (non-energy), agricultural payments.

What’s taxable (2011 rules)

• Unemployment compensation (Box 1): Fully taxable at the federal level for 2011.
• State/local tax refunds (Box 2): Taxable only if you itemized deductions on your 2010 federal return and received a tax benefit from deducting state/local income taxes. If you took the standard deduction, the refund isn’t taxable.
• RTAA/ATAA (Box 5): Generally taxable; report as “Other income.”
• Taxable grants (Box 6): Generally taxable; reporting depends on the nature of the grant.
• Agricultural payments (Box 7) & market gain (Box 8): Generally taxable; farmers usually report on Schedule F.
• Federal tax withheld (Box 4): Credit this amount on your return (it reduces your balance due or increases your refund).

Backup/voluntary withholding note (2011): Federal withholding shown in Box 4 may reflect voluntary withholding you elected or backup withholding at 28% if you failed to furnish a correct TIN or were notified for underreporting. (28% is the 2011 rate.)

Where to report on your 2011 Form 1040

• Unemployment compensation (Box 1): Line 19
• Taxable state/local tax refunds (Box 2): Line 10
• RTAA/ATAA and other income items: Line 21 (“Other income”)
• Agricultural payments: Typically Schedule F (then to Form 1040)
• Federal income tax withheld (Box 4): Include with total federal withholding on Line 62

(If you received multiple Forms 1099-G, combine amounts of the same type before reporting.)

Step-by-step (quick)

1. Check details: Name/SSN, amounts, and the year shown are correct.
2. Decide what’s taxable:
   • Box 1 is taxable.
   • Box 2 taxable only if you itemized in 2010 and got a tax benefit.
3. Enter on the right lines (see above “Where to report”).
4. Claim withholding (Box 4): Add to your total federal tax withheld.
5. Keep records: Don’t mail the form; keep it with your tax file for at least 3 years.

Common mistakes to avoid

• Skipping unemployment income: All 2011 unemployment is federally taxable—report the full Box 1.
• Taxing a nontaxable refund: If you didn’t itemize in 2010, don’t tax Box 2. If you itemized, the taxable part may be less than the full refund (due to limitations/AMT).
• Ignoring errors/fraud: If amounts or identity are wrong, contact the agency for a corrected 1099-G. Don’t ignore mismatches—the IRS has the same data.
• Forgetting federal withholding: Always include Box 4 with your total withholding—leaving it off can cost you.
• Mixing years: Box 3 (if present) can show the tax year the refund relates to (e.g., “2010”). You still report the refund in the year received (2011), not the year it relates to.
• Wrong backup withholding rate: For 2011, the rate is 28%, not 31%.

If the form is late, missing, or corrected

• Missing form: You must still report taxable payments even without a 1099-G. Contact the agency for a copy or use your records to file on time.
• Corrected form after filing: If it changes your tax, file Form 1040X within the normal amendment window (generally 3 years from the original filing date).
• Wrong/inflated amounts or identity theft: Contact the agency immediately for a corrected form (and address potential fraud). If you must file before it’s corrected, report the correct amount and include an explanation with documentation.

After you file

• The IRS will match your return to Forms 1099-G on file (often 12–18 months later).
• If there’s a mismatch, you may receive a CP2000 proposing changes. Respond by the deadline with your explanation or payment.
• States may have different rules (some tax unemployment, some don’t). Check your state return instructions.

Quick FAQs

Do I really have to tax unemployment?
Yes—federally taxable for 2011 (full amount in Box 1).

Is my state refund taxable?
Only if you itemized state/local income taxes in 2010 and got a benefit from that deduction.

I didn’t get a 1099-G for my unemployment—what now?
Still report the income. Ask the agency for a copy; use your payment history if needed.

The 1099-G shows unemployment I never received.
Contact the issuing state to correct it (possible identity theft). Don’t report fraudulent income.

Box 4 shows withholding—how do I use it?
Add it to your total federal withholding on Line 62; it reduces what you owe/increases your refund.

I moved and received two 1099-Gs from different states.
Combine amounts of the same type and report the totals on the appropriate lines.

This guide summarizes 2011 federal rules. Keep your forms and supporting records. For edge cases (AMT effects, partial refund taxability, grant/ag rules), consider the official instructions or a tax professional.

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