What Form 1099-G Is For
Form 1099-G (2018) is an official IRS tax form that reports certain government payments taxpayers received during the calendar year. It documents unemployment benefits, state income tax refunds, and other taxable income issued by federal, state, or local government agencies. Anyone who received unemployment compensation, taxable grants, or local income tax refunds must use this form when filing their federal income tax return.
When You’d Use Form 1099-G
You’ll receive Form 1099-G if you collected unemployment benefits, a state or local tax refund, or other government payments during 2018. Agencies must mail or make available a paper copy by January 31 of the following year. If you have not received your tax form by mid-February, contact the state government or federal agency that issued the payment. Late or corrected forms should be filed promptly to ensure your income tax return is accurate.
Key Rules or Details for 2018
- Reporting requirements: Government agencies must issue Form 1099-G when unemployment compensation, taxable grants, or agricultural payments total at least $600 or $10, depending on the payment type. Always report all taxable income, even if you did not receive a tax form.
- Taxable vs. non-taxable income: Unemployment benefits and taxable unemployment compensation are considered taxable income on your federal tax return. However, state tax refunds are only taxable if you itemized deductions on your previous calendar year’s federal return.
- State and federal differences: Your state government may tax income on Form 1099-G differently. Some states do not tax unemployment insurance benefits, despite federal taxes being applied to unemployment compensation.
- Backup withholding: If you failed to provide your Social Security number or the IRS required withholding, government agencies may have withheld 28 percent of your federal tax. This amount appears in Box 4 of your 1099-G tax form.
- Identity theft protection: If you received a 1099-G for unemployment benefits you never claimed, report fraud immediately to your state labor department and request a corrected form. The IRS and state tax agencies both receive copies, so prompt action prevents tax issues.
- Address and recordkeeping: Keep your address updated with agencies that issue government payments. Save your records and benefit payment summaries for at least three years in case of questions or corrections.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Review your Form 1099-G for accuracy
When you receive your 1099-G form, verify that your name, address, and Social Security number are accurate. Verify that the total amount of benefits paid matches your records from the previous calendar year.
Step 2: Determine which benefits are taxable
Use the IRS instructions to determine which portions of your government payments are considered taxable income. Unemployment benefits paid are generally taxable, while some state refunds are not if you did not deduct state income taxes the prior year.
Step 3: Report the income on your federal tax return
Include the appropriate amounts on Schedule 1 of your federal income tax return. For unemployment insurance benefits, enter the total amount shown in Box 1. For state income tax refunds, use the worksheet for computing itemized deductions.
Step 4: Apply any federal income tax withheld
If your 1099-G form shows federal income tax withheld, claim it as a credit on your Form 1040. This helps lower your tax bill or increases your refund, depending on the total tax payments made during the tax year.
Step 5: File your return and keep copies
Attach Schedule 1 and submit your federal return by the due date. Keep all related forms, records, and paper copies for your files in case an amended return or verification is needed later.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Omitting unemployment income: Some taxpayers overlook the inclusion of unemployment compensation, assuming it’s not taxable. To avoid this, always report all unemployment benefits as taxable income on your federal return.
- Reporting Non-Taxable Refunds: Many taxpayers include state tax refunds, even when they took the standard deduction. To prevent this, only report state refunds if you itemized deductions and received a prior federal tax benefit.
- Ignoring withholding credits: Taxpayers sometimes overlook Box 4 on the 1099-G tax form. To avoid paying more, make sure to claim credit for any federal taxes withheld.
- Failing to address identity theft: If you receive a form for benefits you didn’t claim, contact the state agency to report fraud and request correction. This prevents the IRS from flagging unreported income.
- Using the wrong tax year: Always report income for the year payments were made. For example, unemployment benefits paid in 2018 must appear on your 2018 federal income tax return.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After filing your federal tax return, the IRS matches your reported income with data from Form 1099-G. If discrepancies exist, you may receive a CP2000 notice proposing additional tax or interest. Accurate filing reduces audit risks and ensures your federal and state income taxes are processed smoothly. If you later receive a corrected form, file an amended return using Form 1040X to rectify any errors.
FAQs
Do I have to report unemployment benefits on my federal tax return?
Yes, unemployment compensation is always considered taxable income for federal purposes. Include the total benefits paid as shown on your Form 1099-G when completing your income tax return.
What should I do if I suspect identity theft involving my Form 1099-G?
If you receive a 1099-G form for unemployment benefits you didn’t claim, you may be a victim of identity theft. Report fraud to your state labor department, request a corrected form, and notify the IRS immediately.
How do I correct a mistake or overpayment on my 1099-G tax form?
If you find an error, contact the government agency that issued the form and request a correction. File an amended tax return if you already submitted your federal income tax return using incorrect information.
Are state tax refunds taxable on my 2018 federal tax return?
Only if you itemized deductions on your previous year’s return and received a tax benefit from deducting state taxes, otherwise, your refund is not considered taxable income.
How can I report fraud or errors in my unemployment claim?
If you suspect unemployment fraud or incorrect benefit payments, contact your state government or labor office. Provide any supporting records to help correct or stop the fraudulent claim and protect your tax information.
How can I access my Form 1099-G if it wasn’t mailed to me?
The easiest and fastest way to access your form is through your state tax or labor department’s online portal. You can also request a paper copy by mail if needed.
What happens if I fail to report certain payments on my return?
The IRS receives copies of all Forms 1099-G from issuing agencies. If you omit income, the IRS will send a notice and may assess penalties or interest until you file the correct report.
