Form 1099-G 2018 Tax Year Filing Checklist
Purpose and Coverage
Form 1099-G reports certain government payments to recipients and the IRS, including unemployment compensation, state and local tax refunds, reemployment trade adjustment assistance payments, taxable grants, agriculture payments, and Commodity Credit Corporation market gains. For 2018, unemployment compensation taxation rules remain standard under pre-TCJA law with no temporary exclusions available.
State and local income tax refund inclusion follows the 2017 deduction limitations under TCJA, which capped the deduction at $10,000 for 2018 and subsequent years. These reporting requirements apply to federal, state, and local government units that made qualifying payments during the 2018 calendar year.
Box 1: Unemployment Compensation Reporting
Verify that Box 1 amounts match state unemployment agency records for the entire 2018 calendar year. Recipients must combine all 1099-G Box 1 entries and report the total on their 2018 tax return.
No special exclusion or above-the-line deduction exists for 2018 unemployment compensation. The full amount shown in Box 1 remains taxable to the recipient regardless of the total amount received or the recipient's other income sources.
State and Local Tax Refund Procedures
Complete Box 2 only if the recipient received refunds, credits, or offsets during 2018 for state or local income taxes paid in any prior year. Box 3 identifies the correct prior tax year to which the refund applies, and filers should assume 2017 if Box 3 remains blank.
Box 2 refunds remain reportable income regardless of the $10,000 TCJA deduction cap for 2018 and later years. These refunds stay taxable if the original state or local tax was deducted, even though the recipient's deduction capacity for 2018 onward is reduced.
Determine Box 8 checkbox status by verifying whether the Box 2 amount applies exclusively to a trade or business income tax rather than a tax of general application. Mark the checkbox only if this condition applies.
The marked checkbox signals the recipient to report the amount on Schedule C or Schedule F rather than as itemized deductions. This distinction applies when the refund relates to a tax imposed exclusively on trade or business income.
Federal Income Tax Withholding Requirements
Enter Box 4 amounts only when backup withholding or requested withholding was applied to unemployment compensation, CCC loans, or crop disaster payments during 2018. The backup withholding rate for 2018 is 24 percent under the Tax Cuts and Jobs Act, effective January 1, 2018.
Recipients claim Box 4 amounts as tax credits on their 2018 Form 1040 when filing their federal income tax return. Do not include state or local withholding in Box 4, as this box reports only federal income tax withholding applied to the government payments.
Additional Payment Categories
Report Box 5 amounts for reemployment trade adjustment assistance payments received during 2018 only if the recipient qualifies under the Trade Adjustment Assistance program. Recipients must include these payments on the Form 1040 "Other income" line rather than treating them as unemployment compensation.
Complete Box 6 for federal, state, or local government grants to the recipient during 2018. Confirm these grants are not scholarships or fellowships eligible for exclusion under IRC Section 117.
Enter Box 7 only if the payer is the U.S. Department of Agriculture or a nominee holding agricultural subsidy payments. Recipients report Box 7 amounts on Schedule F per the 2018 Instructions for Schedule F.
Report Box 9 as the market gain on CCC loans, calculated as the difference between the loan repayment value and the original loan amount. Calculate this gain whether the recipient repaid with cash or CCC certificates during 2018. Recipients report Box 9 amounts on Schedule F along with other agricultural income and expenses for the tax year.
State Reporting and Coordination
Complete Boxes 10a through 10b and Box 11 only if state law requires state income tax reporting. Coordinate with state-specific filing requirements because state law determines whether Form 1099-G Copy 2 must accompany the state return.
Different states maintain different submission and documentation requirements for government payment reporting. Payers should contact the applicable state tax department to verify specific filing requirements, deadlines, and whether a Copy 2 submission is mandatory.
Filing Deadlines and Delivery Methods
Recipient Copy Delivery
- Furnish Copy B to recipients by January 31, 2019.
- Late delivery triggers penalties under IRC Section 6722.
- Extension requests require Form 8809 submission.
IRS Filing Deadlines
- Paper filing deadline: February 28, 2019.
- Electronic filing deadline: April 1, 2019.
- Filing 250 or more forms of any single type requires electronic submission.
Form Submission Requirements
Do not print Copy A from the IRS website for submission because the IRS processes paper forms by optical character recognition equipment. Use only official IRS-supplied scannable forms to avoid penalties.
Attach Form 1096 as a summary transmittal when filing Copy A on paper. Reconcile total recipient count and dollar amounts across all forms before submission to ensure accuracy.
Penalty Structure for 2018
IRC Section 6721 establishes penalties for failure to file correct information returns, with amounts based on when you file the correct return. The penalty structure uses three tiers determined by the correction timeline, with higher penalties applying to longer delays or failures to file.
Filing within 30 days of the due date results in a $50 penalty per return, with a maximum penalty of $547,000 per year or $191,000 for small businesses. Filing more than 30 days late, but by August 1, results in a $100 penalty per return, with a maximum of $1,641,000 per year or $547,000 for small businesses.
Filing after August 1 or failing to file required returns results in a $270 penalty per return. The maximum penalty reaches $3,282,500 per year or $1,094,000 for small businesses with average annual gross receipts of $5 million or less.
Small businesses are defined as entities with average annual gross receipts of $5 million or less for the three most recent tax years. IRC Section 6722 establishes similar tiered penalties for failure to furnish correct payee statements to recipients.
Health Coverage and Individual Mandate
The ACA individual shared responsibility payment requirement continued through 2018. Form 8965 serves as the taxpayer's claim form for exemptions from the individual mandate penalty, while Form 1095-B reports health coverage information from insurers and employers.
These forms serve different purposes within the ACA reporting framework. Beginning with tax year 2019, the individual shared responsibility payment was reduced to zero, eliminating the federal penalty for lack of health coverage.
Reportable Transaction Disclosure
If the reportable transaction involving the loss or credit requires disclosure under IRC 6011 and Treasury Regulations Section 1.6011-4, attach Form 8886 with the applicable schedule of transactions. This requirement applies when specific transactions meet the reportable transaction criteria established by the IRS.
Payers must reference 2018-specific penalty thresholds when assessing compliance obligations and potential exposure to penalties. These inflation-adjusted amounts apply specifically to returns required for the 2018 tax year and differ from prior year penalty structures.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
