Form 1099-G: Certain Government Payments (2023)

What the form reports

Government agencies send Form 1099-G to you (and the IRS) when they paid you certain amounts in 2023, most commonly:

• Unemployment compensation (Box 1) — fully taxable federally.
• State/local income tax refunds, credits, or offsets (Box 2) — may be taxable (see below).
• RTAA payments (Box 5), taxable grants (Box 6), agricultural payments (Box 7).
• CCC loan reporting (Box 9/10 when applicable).
• Federal tax withheld (Box 4) if you asked for withholding.

Reporting thresholds:

• $10+ for unemployment and state/local refunds;
• $600+ for RTAA, taxable grants, and agricultural payments.
  (You must still report taxable income even if you didn’t receive a form.)

When you’ll use it (late / amended scenarios)

• You should get it by: January 31, 2024 (for tax year 2023).
• Filed late? You still report all 1099-G income.
• Corrected or missing form? Use the corrected figures; if it arrives after you filed, submit Form 1040-X. If a form is fraudulent (e.g., unemployment identity theft), contact the agency for a corrected $0 form; file using only income you actually received and keep your documentation.

Key rules for 2023

• Unemployment is fully taxable federally in 2023 (no special exclusion).
• State tax refunds (Box 2) are taxable only if you itemized on your 2022 federal return and received a SALT tax benefit (tax benefit rule). If you took the standard deduction in 2022, the 2023 refund is generally not taxable.
• Withholding on unemployment is voluntary (Box 4 shows any federal withholding).
• You must report even without the paper form—the IRS already has the agency’s copy.

How to report it (2023 Form 1040)

Most 1099-G amounts flow through Schedule 1 (Form 1040):

• Unemployment compensation (Box 1) → Schedule 1, line 7 (flows to Form 1040).
• Taxable state/local tax refunds (Box 2) → Schedule 1, line 1 (use the worksheet in the instructions to determine the taxable amount).
• RTAA / taxable grants / agricultural payments → Report as directed in the 2023 instructions (generally Schedule 1, “Other income” lines as applicable).
• Federal income tax withheld (Box 4) → Form 1040, line 25b (“Form(s) 1099”). This increases your total payments.

Keep the form with your records for at least 3 years.

Quick checklist

1. Collect all 1099-G forms (unemployment office, state DOR, USDA, etc.).
2. Confirm your name/SSN and all box amounts; fix errors promptly.
3. Decide taxability:
   • Box 1 is taxable.
   • Box 2: taxable only if you itemized in 2022 and benefited from SALT.
4. Enter on the right lines (see above).
5. Claim Box 4 withholding on Form 1040, line 25b.
6. File & retain the form and any worksheets.

Common mistakes (and fixes)

• Omitting unemployment — All 2023 unemployment is taxable.
• Taxing a non-taxable refund — If you didn’t itemize in 2022, your 2023 state refund is usually not taxable.
• Forgetting Box 4 — Don’t leave federal withholding unclaimed; enter it on line 25b.
• Reporting the wrong year — Box 2 is income in 2023 (year received); Box 3 only identifies the tax year the refund relates to for worksheet purposes.
• Identity-theft 1099-G — Contact the agency, get a corrected $0, and keep the fraud report; don’t report benefits you never received.

After you file

• IRS matching: The IRS matches agency 1099-Gs to your return; mismatches typically generate a CP2000 notice (proposed changes).
• State rules differ: Many states handle unemployment/refunds differently—check your state’s guidance.
• Amend if needed: If you later spot an error, file Form 1040-X promptly to reduce interest.

FAQs (2023)

1) Why did I get a 1099-G if I never had unemployment?
Box 2 may show a state tax refund. Anyone with $10+ of such refunds can receive a 1099-G.

2) Do I attach the form to my return?
No. Enter the amounts; keep the form with your records.

3) I didn’t receive a 1099-G but know I should have.
Contact the paying agency (state unemployment or revenue). Many offer downloadable copies. Report the income even if the form never arrives.

4) Can I withhold tax from unemployment?
Yes—request 10% federal withholding via Form W-4V (and state withholding, if available).

5) I received a fraudulent unemployment 1099-G.
Report to the state agency immediately; request a corrected $0 form. File only true income and retain your identity-theft documentation.

6) How do I know if my state refund is taxable?
If you itemized in 2022 and deducted state income taxes, some or all of the 2023 refund is taxable under the tax benefit rule. If you took the standard deduction, it’s generally not taxable.

7) 1099-G vs. 1099-MISC?
1099-G is for government payments (unemployment, refunds, grants). 1099-MISC is for miscellaneous income (rents, prizes, certain services), typically from non-government payers.

Bottom line:

• Box 1 (unemployment) → taxable; Schedule 1, line 7.
• Box 2 (state refund) → taxable only if you itemized in 2022; Schedule 1, line 1 using the worksheet.
• Box 4 (withholding) → Form 1040, line 25b.
  Match the form, keep your records, and you’ll sidestep notices and amendments.

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