Form 1099-G: Certain Government Payments (2013)
What Form 1099-G Is For
Form 1099-G is an official tax document issued by federal, state, or local government agencies to report certain types of payments they made to you during the tax year. Think of it as a receipt from the government showing money you received that may be taxable income.
This form reports several types of government payments, but the two most common are unemployment compensation and state or local income tax refunds. If you collected unemployment benefits in 2013, you'll receive a 1099-G showing how much you were paid. Similarly, if you received a state or local tax refund—especially if you itemized deductions on your previous year's federal return—the state will send you this form.
Other payments reported on Form 1099-G include Reemployment Trade Adjustment Assistance (RTAA) payments for workers affected by foreign trade, taxable federal or state grants (like certain energy conservation grants), agricultural subsidies from the USDA, and market gains from Commodity Credit Corporation (CCC) loans for farmers.
The form serves a dual purpose: it informs you about potentially taxable income you must report on your federal tax return, and it tells the IRS what you received so they can verify your return's accuracy. IRS.gov
When You’d Use Form 1099-G
Regular Filing Timeline
You should receive your Form 1099-G by January 31, 2014 (for the 2013 tax year). You'll use this form when preparing your 2013 federal income tax return, which is due April 15, 2014. The information from Form 1099-G gets transferred to specific lines on your Form 1040, 1040A, or 1040EZ.
Late Situations
Sometimes government agencies issue Forms 1099-G late, or you might discover you never received one. If you haven't received your 1099-G by early February, contact the government agency that made the payments (your state's unemployment office or revenue department). You can also check online portals—many states now provide electronic access to these forms. Even if you don't receive the form, you're still legally required to report the income on your tax return.
Amended Returns
If you discover errors on your 1099-G after filing your return, or if the government issues a corrected form (marked "CORRECTED" at the top), you may need to file an amended return using Form 1040X. Common scenarios include receiving a corrected 1099-G showing a different amount than originally reported, or realizing you forgot to include unemployment compensation or a state tax refund on your original return. You generally have three years from the original filing deadline to file an amended return. IRS.gov
Key Rules or Details for 2013
Reporting Thresholds: Government agencies must issue Form 1099-G if they paid you $10 or more in unemployment compensation or state/local tax refunds, or $600 or more in RTAA payments, taxable grants, or agricultural payments. These thresholds determine when the government sends you the form, but remember—even if you don't receive a 1099-G, you must still report the income.
Taxability of Unemployment: All unemployment compensation is fully taxable as ordinary income at the federal level. This includes regular state unemployment benefits, federal unemployment extensions, Railroad Retirement Board unemployment payments, and payments from contributory programs like California's Family Temporary Disability Insurance. The full amount in Box 1 must be reported on your federal return, regardless of whether federal taxes were withheld.
State Tax Refund Rules: This is where it gets tricky. Your state or local tax refund is only taxable if you itemized deductions on your previous year's federal return (2012 for tax year 2013) AND claimed a deduction for state and local taxes paid. If you took the standard deduction on your 2012 return, your 2013 state refund is not taxable. This prevents you from getting a tax benefit twice—once from the deduction and again from avoiding tax on the refund.
Withholding Options: For unemployment compensation in 2013, you could request voluntary federal income tax withholding to avoid owing taxes when filing your return. The withholding amount appears in Box 4 of your 1099-G and counts toward your total federal tax paid for the year.
Multiple Forms: If you received payments from different government programs or for different tax years, you might receive multiple Forms 1099-G. Each must be accounted for separately on your tax return. IRS.gov
Step-by-Step (High Level)
Step 1: Gather Your Forms – Collect all Forms 1099-G you received from any government agencies. Check each carefully for accuracy, comparing the amounts to your own records or benefit statements received throughout the year.
Step 2: Verify Box Amounts – Look at Box 1 (unemployment compensation), Box 2 (state tax refunds), and any other boxes that contain amounts. Make sure you understand what each payment represents and verify the payer's identification.
Step 3: Determine Taxability – For unemployment (Box 1), the entire amount is taxable. For state tax refunds (Box 2), determine whether you itemized deductions on your 2012 federal return. If you took the standard deduction, this refund is not taxable. Check Box 3 to confirm which tax year the refund relates to.
Step 4: Report on Your Tax Return – Transfer unemployment compensation from Box 1 to the designated unemployment line on your Form 1040 (Line 19 for 2013). If you had multiple 1099-Gs, combine all Box 1 amounts. For taxable state refunds, report these on the appropriate line for state and local tax refunds. Other payments go to their designated lines based on the box number and payment type.
Step 5: Claim Withholding – If Box 4 shows federal income tax withheld, include this amount with your other tax withholdings on the "Federal income tax withheld" line of your return. This reduces your tax owed or increases your refund.
Step 6: Keep Records – File your Form 1099-G with your tax return documentation. Keep it for at least three years in case of IRS questions or if you need to file an amended return. IRS.gov
Common Mistakes and How to Avoid Them
Mistake #1: Forgetting to Report Unemployment – Many people mistakenly believe unemployment compensation isn't taxable because it's a benefit during hardship. However, 100% of unemployment is taxable federal income. Always report the full Box 1 amount, even if no taxes were withheld. Set aside money for taxes if you didn't have withholding.
Mistake #2: Incorrectly Reporting State Tax Refunds – The most common error is reporting a state tax refund as income when you took the standard deduction the previous year. Only taxpayers who itemized in 2012 need to report their 2013 state refund as income. Review your 2012 return before including this amount.
Mistake #3: Missing Small Amounts – Some taxpayers ignore Forms 1099-G showing small amounts (like $15 in unemployment or a $25 state refund). While these seem insignificant, the IRS receives copies of all 1099-Gs and matches them to your return. Report all amounts to avoid automated IRS notices.
Mistake #4: Not Combining Multiple Forms – If you received unemployment from two states or had multiple 1099-Gs, you must add all Box 1 amounts together and report the total. Don't just report one form and ignore others.
Mistake #5: Ignoring Box 3 – Box 3 shows which tax year your state refund relates to. If it says "2011" instead of being blank (which means 2012), you need to determine if you itemized on your 2011 return, not your 2012 return. Check this box carefully to apply the taxability rules correctly.
Mistake #6: Overlooking Withholding – Don't forget to include the amount in Box 4 (federal income tax withheld) with your other withholdings on your return. This is money you've already paid toward your tax bill. IRS.gov
What Happens After You File
IRS Matching Process: The IRS uses automated systems to match the Forms 1099-G filed by government agencies against the income you reported on your tax return. This typically happens several months after filing. If everything matches, you'll hear nothing—which is good news.
Discrepancy Notices: If there's a mismatch—for example, you reported $8,000 in unemployment but the IRS has a 1099-G showing $10,000—you'll receive a CP2000 notice, typically 12 to 18 months after filing. This isn't an audit, but a proposal to adjust your return. You can respond by agreeing to the change, providing documentation that you were correct, or explaining the discrepancy.
Refund Processing: If you're due a refund, the unemployment compensation and state tax refund information on your 1099-G affects the calculation. Your refund amount is processed normally, but having reported taxable unemployment or state refunds may reduce the amount compared to your other income.
State Considerations: Remember that while the IRS requires federal reporting, your state's rules may differ. Many states don't tax unemployment compensation, even though it's federally taxable. Check your state's rules separately.
Future Year Impact: If you received a large state tax refund that was taxable in 2013, it might affect your tax planning for 2014. Consider adjusting withholding or estimated payments if you expect similar refunds in the future. IRS.gov
FAQs
Q1: I received unemployment but never got a Form 1099-G. Do I still need to report it?
Yes, absolutely. You must report all unemployment compensation regardless of whether you received the form. Contact your state unemployment office to request a copy, or check if they offer online access to tax documents. You can also refer to your bank statements or benefit statements to calculate the total amount received.
Q2: My state tax refund was applied to this year's estimated taxes. Is it still taxable?
Yes, if you itemized deductions on your previous year's federal return. The form of the refund doesn't matter—whether you received a check, had it direct deposited, applied it to next year's taxes, or even donated it to charity. If you claimed a deduction for those state taxes, getting the money back (in any form) is taxable income.
Q3: I'm married filing jointly. My spouse and I both received unemployment. How do we report this?
You should receive separate Forms 1099-G—one for each spouse. Add both Box 1 amounts together and report the combined total on the single unemployment compensation line of your joint Form 1040. The IRS will match both forms to your joint return. Each spouse should calculate their own taxable amount separately if either of you contributed to a governmental unemployment compensation program.
Q4: Can I deduct the state taxes shown on my 1099-G?
This is often confusing. If Box 11 shows state income tax withheld from your unemployment, you can include this with your other state taxes paid when calculating your itemized deductions on Schedule A for 2013 (to be filed in 2014). However, if Box 2 shows a state tax refund from a previous year, that's income to you if you itemized previously—it's not a deduction.
Q5: I received a corrected Form 1099-G after filing my return. What should I do?
Compare the corrected form to the original. If the amounts changed significantly and you already filed your return using the wrong information, you should file Form 1040X (Amended U.S. Individual Income Tax Return) to correct your return. If the difference is small (under $50) and doesn't affect your refund or tax owed by more than a nominal amount, the IRS may not require correction, but it's still best practice to amend.
Q6: My 1099-G shows income for 2013, but I received the form in January 2014. Which year do I report it?
Report it on your 2013 tax return (filed in 2014). The form shows the year the income was paid (2013), not the year you received the form. Tax forms are almost always issued in January of the year after the income was paid. The year "2013" printed on the form tells you which tax return it belongs to.
Q7: I repaid some unemployment benefits. How do I handle the 1099-G?
The Form 1099-G shows the total amount paid to you before any repayments. If you repaid unemployment benefits in the same year (2013), you can deduct the repayment amount if you itemize deductions. If you repaid in a later year, you'll handle it on that year's return. Keep documentation of all repayments as the IRS may question why you didn't report the full 1099-G amount.
This summary is based on official 2013 IRS instructions for Form 1099-G. Tax laws change annually, and this information applies specifically to the 2013 tax year. For current year guidance, always consult the latest IRS publications at IRS.gov.
