Form 1099-G: Certain Government Payments (2020) – A Complete Guide

What the form is for

Form 1099-G reports certain payments you received from federal, state, or local agencies in 2020. A copy goes to you and the IRS, so amounts on the form should also appear on your tax return.

Common boxes you’ll see

• Box 1 – Unemployment compensation. Includes state UI, PUA/PEUC, and RRB unemployment. Amount is gross benefits before any withholding.
• Box 2 – State or local income tax refund/credit/offset. Potentially taxable only if you itemized state and local income taxes in the prior year.
• Box 5 – RTAA payments (≥ $600).
• Box 6 – Taxable grants (≥ $600), e.g., certain energy or other government grants.
• Box 7 – Agriculture payments (≥ $600).
• Box 9 – Market gain on CCC loans (farmers).
• Box 4 – Federal income tax withheld (including voluntary 10% UI withholding).

When you’ll use it (including late/amended returns)

• You should have received it by: Jan 31, 2021 (2020 income).
• 2020 filing deadline: Generally May 17, 2021 (extended from Apr 15 for most taxpayers).
• Filing late? Report everything from your 1099-G anyway—late is better than not filing.
• Amending? Use Form 1040-X if you:
  • Forgot to include 1099-G income,
  • Got a corrected 1099-G,
  • Reported unemployment you never actually received (identity theft/fraud case).

Special 2020 rule (ARPA): Up to $10,200 of 2020 unemployment per spouse (MAGI < $150,000) could be excluded from income. If you filed before March 2021, the IRS generally adjusted returns automatically; amend only if other items (e.g., credits) changed because of the exclusion.

Key rules for 2020

• Reporting thresholds:
  • $10+ for unemployment (Box 1) and state/local refunds (Box 2).
  • $600+ for Boxes 5–7 and most grants.
• Taxability:
  • Unemployment is taxable federally (subject to the one-year ARPA exclusion noted above).
  • State/local refunds are taxable only if you itemized in the prior year and received a tax benefit from deducting state/local income taxes.
• Multiple forms: It’s common to receive more than one 1099-G (e.g., UI + state refund, or from multiple states). Add them appropriately.
• Identity-theft surge (2020): If you received a 1099-G for benefits you didn’t receive, contact the issuing agency immediately and request a corrected form showing $0.

How to report (high-level)

1. Review the form(s). Confirm your SSN, payer info, and each box amount. Compare UI totals to your state payment history/bank deposits.
2. Unemployment (Box 1).
   • Report on Schedule 1 (Form 1040), line 7.
   • If eligible for the ARPA exclusion, reduce the reported taxable amount accordingly.
3. State/local refund (Box 2).
   • If you itemized last year: Use the worksheet in the Schedule 1 instructions to compute the taxable portion; report on Schedule 1, line 1.
   • If you took the standard deduction last year: Generally not taxable; do not report.
4. Withholding (Box 4). Add to Form 1040, line 25d with your other withholding.
5. Other boxes (5–7, 9). Report per the instructions (e.g., many farm amounts go to Schedule F; taxable grants to Schedule 1 – other income).
6. Keep records. Retain the form(s) and support for at least 3 years.

Common mistakes (and quick fixes)

1. Not reporting unemployment at all.
   Fix: Always include Box 1 on Schedule 1 (adjusted for the ARPA exclusion if applicable).
2. Reporting a state refund when you took the standard deduction.
   Fix: If you didn’t itemize last year, the refund is usually not taxable.
3. Ignoring a fraudulent 1099-G.
   Fix: Contact the agency, file an identity-theft report if needed, and obtain a corrected 1099-G. Don’t report income you didn’t receive.
4. Forgetting to claim UI withholding (Box 4).
   Fix: Enter it on Form 1040, line 25d—it can increase your refund or reduce balance due.
5. Missing the $10,200 unemployment exclusion (2020-only).
   Fix: Verify whether your return was auto-adjusted. Amend if related credits changed and weren’t captured.

What happens after you file

• IRS matching. The IRS matches your return to the 1099-G(s) on file.
• If matched: Normal processing/refund.
• If not: You may get a CP2000 proposing changes. Respond by the deadline with explanations/corrections (e.g., corrected 1099-G, worksheet showing nontaxable state refund, etc.).
• Identity-theft cases: Refunds may be delayed while the IRS verifies. Keep your state fraud report and corrected form handy.

FAQs

Q1: I didn’t receive a 1099-G but did get unemployment. Do I still report it?
Yes. Report the actual amount received using your state portal/bank records, and try to obtain the form for your files.

Q2: Box 2 shows a state refund, but I used the standard deduction last year. Report it?
Generally no. If you didn’t itemize, the refund isn’t taxable federally.

Q3: Can I (or could I have) withheld taxes from UI?
Yes—federal withholding from UI is voluntary (typically 10%). States may also offer state withholding.

Q4: I got multiple UI programs (PUA/PEUC). Separate forms?
Depends on the state. Combine all Box 1 amounts for federal reporting.

Q5: I got a 1099-G for unemployment I never received.
Treat as identity theft. Contact the issuing agency for a corrected form showing $0 and report only actual income on your return.

Q6: What exactly was the $10,200 exclusion?
For 2020 only, if MAGI < $150,000: exclude up to $10,200 of UI per spouse. Many early-filed returns were auto-adjusted by the IRS.

Q7: How long should I keep my 1099-G?
At least 3 years (longer if you filed late or for complex situations).

Quick checklist

• All 1099-G forms collected (from every state/agency).
• Box 1 reported on Schedule 1, line 7 (ARPA exclusion applied if eligible).
• Box 2 reported only if you itemized last year (worksheet done).
• Box 4 withholding included on Form 1040, line 25d.
• Identity-theft/fraud addressed and corrected form obtained (if applicable).
• Copies saved with your 2020 return.

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