Form 1099-G: Certain Government Payments (2016) — Your Complete Guide

Form 1099-G reports certain payments you received from federal, state, or local agencies in 2016. If you collected unemployment benefits, got a state income-tax refund, or received specific government payments, you’ll likely see this form. You don’t file the form yourself—the agency sends a copy to you and to the IRS—but you must use it when preparing your federal return.

What the form is for

Government agencies use Form 1099-G to report (among other items):

• Unemployment compensation (Box 1)
• State or local income tax refunds/credits/offsets (Box 2)
• Reemployment Trade Adjustment Assistance (RTAA) (Box 5)
• Taxable grants (Box 6)
• Agricultural payments (Box 7) and market gain on CCC loan repayments (Box 8)
• Federal income tax withheld (Box 4), if any

You’ll get Copy B for your records by January 31, 2017. Agencies must file Copy A with the IRS by February 28, 2017 (paper) or March 31, 2017 (e-file).

Reporting thresholds (2016):

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

When you’ll use it (late & amended returns)

• Filing season timing: Use the form to prepare your 2016 federal return, due April 18, 2017 (deadline moved because April 15 fell on a Saturday and D.C.’s Emancipation Day affected the next business day).
• Late returns: Still report the 1099-G amounts when you file—income doesn’t disappear because you’re late.
• Amended returns (Form 1040-X): Amend if you missed unemployment income, mis-handled a state refund’s taxability, or receive a CORRECTED 1099-G that changes your tax.

If you didn’t receive the form, contact the paying agency (many states let you download 1099-G online). You’re responsible for reporting the income even without the form.

Key rules for 2016

Unemployment compensation (Box 1)

• Fully taxable for federal purposes.
• Report on Form 1040 (2016) line 19 (or the equivalent line on 1040A/1040EZ).
• If you contributed to a governmental program (rare), see Pub. 525 for the limited rule that may reduce the taxable amount.

State or local income-tax refunds (Box 2)

• Taxable only if you itemized state/local income taxes on your 2015 federal return and received a tax benefit from that deduction (tax benefit rule).
• If you took the standard deduction in 2015, the refund isn’t taxable.
• Use the State and Local Income Tax Refund Worksheet in the 2016 Form 1040 instructions to determine the taxable portion.

Box 3 (Tax year): Shows the tax year the refund relates to (generally 2015 for a refund received in 2016). Treat the refund as 2016 income if it was paid in 2016. If Box 3 is blank, check your state notice—most 2016 forms still relate to 2015.

Withholding (Box 4)

• Includes voluntary withholding (e.g., 10% from unemployment via Form W-4V) or backup withholding at 28% (2016 rate) if you didn’t provide a correct TIN or were notified for underreporting.
• Claim this amount with your total federal tax withheld on Form 1040 (2016) line 64.

Agency filing deadlines (2016 info returns)

• IRS Copy A due Feb 28, 2017 (paper) / Mar 31, 2017 (e-file).
• Recipient copies due Jan 31, 2017.

Step-by-step (high level)

1. Review the form: Verify your name/SSN and each box amount.
2. Identify boxes with amounts: Commonly Box 1 (unemployment) and/or Box 2 (state refund); note Box 4 withholding.
3. Determine taxability:
   • Box 1 is taxable.
   • Box 2 is taxable only if you itemized in 2015 and got a benefit.
4. Gather all Forms 1099-G: Combine like boxes (e.g., add all Box 1 amounts).
5. Report on your return:
   • Unemployment: 1040 line 19
   • Taxable state refund: 1040 line 10
   • RTAA/other income: 1040 line 21 (“Other income”)
   • Agricultural payments: Report on Schedule F, then to 1040
6. Claim withholding credit: Add Box 4 to total withholding on line 64.
7. Keep records: Retain the form(s) with your tax file for at least 3 years.

Common mistakes (and easy fixes)

• Skipping unemployment income: All 2016 unemployment is federally taxable—report full Box 1.
• Taxing a non-taxable refund: If you didn’t itemize in 2015, don’t include Box 2. If you did, use the worksheet to find the taxable portion.
• Forgetting multiple forms: Combine all Box 1 totals; combine all Box 2 totals, etc.
• Misreading Box 3: It identifies the prior tax year of the refund (usually 2015), but you report it in the year paid (2016).
• Leaving off Box 4: Always add federal withholding to line 64—don’t leave money on the table.
• Identity theft: If you got a 1099-G for benefits you didn’t receive, report it to the state immediately, file IRS Form 14039, and keep documentation. Report only what you actually received.

What happens after you file

• The IRS matches your return to the 1099-G filed by the agency (often several months later).
• If there’s a mismatch, you may receive a CP2000 underreporter notice. You can agree and pay or respond with documentation (e.g., corrected form, worksheet).
• States may treat unemployment/refunds differently—check your state return instructions. (Copy 2 of Form 1099-G is for state filing, when applicable.)

FAQs

I never got my 1099-G, but I received unemployment. What now?
Contact the state to obtain it (or download online). You must still report the income—use your payment history if necessary.

My Box 2 state refund looks wrong.
Ask your state revenue department for a CORRECTED 1099-G. If you already filed, amend with Form 1040-X if the correction changes your tax.

Can I withhold taxes from unemployment?
Yes—file Form W-4V to withhold 10%. It will appear in Box 4 and credits your federal tax.

I repaid unemployment. How do I report it?
Same-year repayments should net on the 1099-G. Different-year repayments are handled under the claim of right rules (see Pub. 525)—you may claim a deduction or credit in the year of repayment.

I received unemployment from two states—will I get two forms?
Yes. Combine Box 1 amounts and report the total.

Sources (2016)

• Instructions for Form 1099-G (2016) – i1099g–2016.pdf
• Form 1099-G (2016) – f1099g–2016.pdf
• General Instructions for Certain Information Returns (2016) – i1099gi–2016.pdf
• Publication 525 (2016) – Taxable and Nontaxable Income (repayments & claim of right)

(All titles available at IRS.gov.)

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