What is IRS Form 1099-G?
The IRS requires governmental agencies to report some types of payments that they have made during the year since those payments may be considered taxable income for the payment recipients. Unemployment income is considered to be taxable and has to be reported every year, even if the benefits have been partially or complete repaid. Form 1099-G is mailed to those who have received unemployment benefits at any point during the tax year.
Similar to other 1099 forms, Form 1099-G is used to report income outside of what would normally appear on a W-2 form. A copy of 1099-G is issued to the income recipient along with the IRS. Individuals may also receive a Form 1099-G if they claim state income tax as a deduction and received a refund or credit. For those who use itemized deductions on their tax return, state income taxes paid may be deducted. If the state tax deducted on a tax return is refunded later on, the refunded amount must be reported as taxable income. This is one purpose of Form 1099-G.
Only income from government sources is reported on Form 1099-G. The government agency that issued the income is usually the one that fills out and sends the form to the IRS. Taxable payments can include disability insurance payments, unemployment assistance benefits, and paid family leave benefits along with standard unemployment. Other types of income that might be reported on 1099-G include state local tax refunds or credits, trade or wage subsidies, payments from state tuition programs, and more.
There are 9 boxes on the form that separate each type of payment. Unemployment compensation must be reported on a tax return, and unemployment income can be found in Box 1 on Form 1099-G. Tax credits or offsets that are found in Box 2 are also reported on a tax return. Boxes 4, 10a and 10b, and 11 have information about state, local and federal income tax withheld from any payments that were received. Box 5 shows trade adjustments, and Box 6 shows any grant income received that may be taxable. It is not necessary to attach your 1099-G form to a tax return.
Amounts reported on a 1099-G form must be reported on a federal tax return for the year that the amount was received. Form 1099-G is submitted to the taxpayer by the end of January and it does not need to be submitted to the IRS until February. Software such as the software offered at 1099FIRE.com can help government agencies complete their 1099-G Forms.