Form 1099-G Checklist for Tax Year 2025
Purpose
Form 1099-G reports government payments, including unemployment compensation, state and local tax refunds, reemployment trade adjustment assistance payments, taxable grants, and agriculture payments. Recipients must verify all reported amounts against their records to ensure accuracy and prevent reporting income they did not actually receive.
The tax treatment of each payment type depends on current federal tax law, the recipient's filing status, and whether the recipient claimed itemized deductions in prior tax years. Recipients must evaluate their individual circumstances to determine which amounts are taxable, which amounts qualify for exclusions, and how to report each payment category on the appropriate tax forms and schedules.
Filing Steps
1. Verify Box 1 Unemployment Compensation Reporting
Confirm the payer issued a separate Form 1099-G if you made contributions to a governmental unemployment compensation program or a governmental paid family leave program and received payments from that program during 2025. You must not combine amounts across multiple forms when reporting these payments on your tax return.
2. Determine Box 2 Refund Taxability Against Prior-Year Schedule A
Box 2 state or local income tax refunds are taxable only if you claimed itemized deductions on Schedule A in the year you paid the tax. The $40,000 SALT deduction cap for 2025 (increased from $10,000) affects refund taxability based on whether the cap limited your prior-year state and local tax deduction. Verify refund taxability aligns with the actual SALT deduction claimed on your prior-year return, not the full amount you paid.
3. Confirm Box 3 Tax Year Matches Refund Year
Box 3 identifies the tax year for which Box 2 refunds were issued and corresponds to when you paid and deducted the original tax, not calendar year 2025. You must report the refund income on your 2025 tax return even if Box 3 shows a different tax year.
4. Account for Box 4 Federal Income Tax Withholding
Report any amount shown in Box 4 as federal income tax paid on your 2025 return. Box 4 shows withholding applied because you did not provide your taxpayer identification number or because you requested voluntary withholding on unemployment compensation, Commodity Credit Corporation loans, or certain crop disaster payments.
5. Report Box 5 RTAA Payments on Schedule 1
Include reemployment trade adjustment assistance payments shown in Box 5 on the "Other income" line of Schedule 1 (Form 1040). Do not report these payments on the unemployment compensation line or treat them as self-employment income.
6. Classify Box 6 Taxable Grants by Source
Report Box 6 taxable grants based on their source and purpose. Federal, state, or local government grants reported in this box are fully taxable unless you qualify for an exclusion under Internal Revenue Code Section 117 for scholarships covering tuition, fees, or books, or another specific statutory relief provision.
7. Report Box 7 Agriculture Payments on Schedule F
If the payer is the Department of Agriculture, report the Box 7 amount on Schedule F (Form 1040) in the appropriate income category. A non-USDA payer indicates you received the subsidy as a nominee on behalf of another taxpayer and must follow Publication 225 guidance for proper classification and reporting. Partnerships engaged in farming report agriculture income on Form 1065, not Form 8825.
8. Determine Box 8 Trade or Business Income Classification
An "X" in Box 8 indicates the Box 2 refund represents income tax applicable exclusively to trade or business income rather than general application tax. Report the Box 2 amount on Schedule C or Schedule F, depending on your business type, not as an ordinary state or local tax refund.
9. Report Box 9 CCC Loan Market Gain on Schedule F
Include Box 9 market gain on Commodity Credit Corporation loans in your Schedule F income. Treat this market gain as agricultural income subject to Schedule F reporting requirements and self-employment tax if applicable.
10. Verify State Income Tax Withholding (Boxes 10a–11)
Boxes 10a through 11 report the state identification number and state income tax withheld from the payment. Report state income tax withholding separately on your state return if you must file one. The IRS receives Copy A, while state tax departments receive Copy 2 when you file a state return.
11. Confirm Account Number Matches Your Records
The account number field may contain an identifier that the payer assigned to distinguish your account. Match this number to your records to verify the form reports payments you actually received and prevent misreporting of amounts intended for another taxpayer.
12. Address Identity Theft Concerns for Box 1 Amounts
If you suspect identity theft related to unemployment compensation shown in Box 1, do not report the incorrect amount on your tax return. Contact the IRS identity theft division before filing to report the fraud. Report only amounts you actually received or amounts credited to estimated tax payments or offsets on your behalf.
Key Tax Year 2025 Considerations
SALT Deduction Cap Increase
The state and local tax deduction limit increased to $40,000 for married couples filing jointly and $20,000 for married filing separately for the tax year 2025. Single filers and heads of household also received the $40,000 limit. This increase affects whether state tax refunds reported in Box 2 are taxable based on whether your prior-year SALT deduction reached the applicable cap.
Contributions to Governmental Programs
If you itemize deductions on Schedule A, you may deduct contributions you made to governmental unemployment compensation or paid family leave programs as taxes paid. Non-itemizers cannot claim these deductions and must use the standard deduction instead.
Identity Theft Reporting Resources
The IRS expanded guidance for taxpayers who receive Form 1099-G reporting fraudulent unemployment claims. You must access specialized IRS resources before filing your return to resolve incorrect reporting and prevent tax liability on amounts you did not receive.
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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.
