Form 1099-G (2020 Tax Year) Checklist
Purpose and Overview
Form 1099-G reports certain government payments made during the 2020 calendar year to recipients. Federal, state, and local government units use this form to report unemployment compensation, state or local income tax refunds or credits, reemployment trade adjustment assistance payments, taxable grants, and agricultural payments.
The officer or employee having control of these payments must file Form 1099-G with the Internal Revenue Service. You must furnish copies to recipients according to the specified deadlines established by federal tax regulations.
Filing Preparation Steps
Verify Unemployment Compensation Reporting
You must report all unemployment compensation payments of ten dollars or more in Box 1. Include Railroad Retirement Board payments for unemployment and any payments from contributory programs deemed to be unemployment compensation in nature.
California's Family Temporary Disability Insurance payments and government-paid paid family leave program payments require separate Form 1099-G filings for each contributory program. Enter the total amount before any income tax withholding, and report federal income tax withheld at the recipient's request in Box 4.
Identify State or Local Tax Refund Year in Box 3
- Box 2 requires you to report state or local income tax refunds, credits, or offsets of ten dollars or more, including refundable tax credits and incentive payments.
- Box 3 identifies the tax year for which the Box 2 refund applies using a four-digit year format, with no entry required if the refund applies to 2019.
Classify Box 2 Income Type with Checkbox 8
Box 8 contains a checkbox that you must mark if the Box 2 amount represents a refund, credit, or offset from an income tax applying exclusively to trade or business income. Taxes on dividends, net capital gains, and net taxable income of unincorporated businesses qualify as income taxes rather than taxes on gross receipts.
A tax applying exclusively to trade or business income requires you to check Box 8 on the form. You must furnish Form 1099-G or an acceptable substitute statement to the recipient in all cases when Box 8 applies to the refund.
Report Federal Backup Withholding in Box 4
Box 4 shows federal income tax withheld through backup withholding or voluntary withholding arrangements. You must backup withhold at twenty-four percent on payments reported in Box 6 or Box 7 if the recipient fails to furnish a taxpayer identification number or if the Internal Revenue Service notifies you that the number is incorrect.
Voluntary federal withholding on unemployment compensation, Commodity Credit Corporation loans, and certain crop disaster payments also appear in Box 4. State income tax withholding is not reported to the Internal Revenue Service.
Include Reemployment Trade Adjustment Assistance and Taxable Grant Amounts
Report reemployment trade adjustment assistance payments of six hundred dollars or more in Box 5. Box 6 requires reporting taxable grants of six hundred dollars or more from federal, state, or local programs providing subsidized energy financing or grants for energy conservation or production projects.
Taxable grants administered by Indian tribal governments and other state and local grants, ordinarily taxable for federal income purposes, also appear in Box 6. Federal grants are taxable unless the authorizing legislation states otherwise.
Complete Agricultural Payment Schedule
Enter Department of Agriculture subsidy payments in Box 7, including market facilitation program payments made during the year. If you received subsidy payments as a nominee for another person, file Form 1099-G to report the actual owner and enter the payment amount in Box 7.
Box 9 reports the market gain associated with repaying a Commodity Credit Corporation loan during the tax year. You must enter market gain amounts when the recipient repaid the loan using cash or Commodity Credit Corporation certificates.
Record State Income Tax Withheld
Boxes 10a through 11 provide space for state information reporting required by state tax departments or the Combined Federal or State Filing Program. Enter the two-letter state abbreviation in Box 10a, the state identification number in Box 10b, and the state income tax withheld in Box 11. These boxes support the Combined Federal or State Filing Program and accommodate filers required to submit paper copies to state tax departments.
You may use these boxes to report payments for up to two states on a single Form 1099-G by including information for each state. The dashed line provided on the form separates the information for each state to maintain clarity and accuracy in your reporting to tax authorities.
Prepare for Furnishing and Filing Deadlines
Furnish Copy B to each recipient by January 31, 2021, to meet federal statement furnishing requirements for government payment reporting. File Copy A with the Internal Revenue Service by March 1, 2021, if filing paper forms, or by March 31, 2021, if filing electronically.
You are not required to furnish a copy to the recipient if you determine that the recipient did not claim itemized deductions for the tax year. Filing Form 1099-G with the Internal Revenue Service remains mandatory in all cases, regardless of whether you furnish a copy to the recipient.
Recipient Considerations
Recipients must report Box 1 unemployment compensation on their federal income tax return. Married taxpayers filing jointly must calculate the taxable amount separately for each spouse receiving unemployment compensation.
Recipients who contributed to governmental unemployment compensation programs or governmental paid family leave programs may deduct contributions on Schedule A if itemizing deductions. Those who do not itemize deductions include in income only the amount exceeding their contributions to the program.
Box 2 state or local income tax refunds are taxable only if the recipient deducted the underlying state or local income tax paid on Schedule A in a prior year. A blank Box 3 indicates the refund applies to 2019 taxes.
Recipients must report Box 4 federal income tax withheld as tax paid on their return. Box 5 reemployment trade adjustment assistance payments, Box 6 taxable grants, and Box 7 agricultural payments require reporting on the appropriate schedules based on the income type and the recipient's filing status.
Copy Distribution and Privacy Requirements
Copy A with scannable red ink goes to the Internal Revenue Service with Form 1096 as the transmittal document. Copy 1 goes to the state tax department if state filing is required.
Copy 2 goes to the recipient for use in filing state income tax returns. Copy B goes to the recipient for federal income tax filing purposes.
You may truncate the recipient's taxpayer identification number on payee statements to show only the last four digits for privacy protection. The complete taxpayer identification number must appear on all documents filed with the Internal Revenue Service.
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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.
