What is 1099G? The Complete Guide to Form 1099-G
by Thomas Maxon, CEO & Co-founder of Claimyr | UPDATED: 12/01/2023
Form 1099-G is given to you by a government (most commonly a state) agency so you can report these earnings to the IRS. This only applies to taxable benefits you receive from the government. For most, Form 1099-G pertains to taxable unemployment benefits. But other government benefits schemes may also be taxable. This article will help you understand what Form 1099-G is, what type of benefits are taxable, how to get your 1099-G Form, how to contact the agency issuing your 1099G, how to clarify and potentially change the amounts due to the IRS, and key tips on how to jump through the bureaucratic hoops to resolve your tax obligations.
If you receive a 1099G from your state or a government agency and you're confused it's either 1.) you may have not realized you received taxable benefits over the past year, or 2.) someone filed for unemployment using your identity. This article will help clarify how to address these two scenarios as well.
Table of Contents
IRS Form 1099-G
This is IRS Form 1099-G, which is generally given to you by a state employment agency already filled out. It is used to report certain government payments, most commonly unemployment benefits given to you by the state you received benefits. Here are the specifics of the fields and some tips on how to fill out Form 1099-G:
PAYER'S information: This includes the name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone number of the entity that paid out the benefits or compensation.
PAYER'S TIN & RECIPIENT'S TIN: TIN stands for Taxpayer Identification Number. The payer's TIN is the tax ID for the entity that made the payment, and the recipient's TIN is generally the Social Security Number (SSN) or Employer Identification Number (EIN) of the individual or entity who received the payment.
RECIPIENT'S name and address: Include the name and address of the person or entity that received the payment. This should match the information that the IRS has on file.
Box 1 Unemployment compensation: Enter the total amount of unemployment compensation paid to the recipient in the tax year.
Box 2 State or local income tax refunds, credits, or offsets: Enter any state or local income tax refunds, credits, or offsets received.
Box 3 Box 2 amount is for tax year: If the amount in Box 2 is not for the current tax year, indicate the year for which it is applicable
Form 1099-G: Instructions
Follow these instructions on how to interpret and use the information reported on IRS Form 1099-G, which is typically used for certain government payments, including unemployment compensation, state or local income tax refunds, and agricultural payments. Here's a summary and tips for each box mentioned in the instructions:
Box 1: Reports the total unemployment compensation (or comparable governmental payment) received. To report this on your tax return, combine all amounts from any Forms 1099-G and report them as income. If you itemize deductions, only the amount exceeding your contributions can be deducted.
Box 2: Indicates any state or local income tax refunds, credits, or offsets you received. Not all of these refunds are taxable; the instructions give conditions under which they may be taxable, such as if they were deducted on a previous year's federal tax return.
Box 3: Identifies the tax year associated with the refunds, credits, or offsets reported in Box 2.
Box 4: Shows any federal or state withholding from payments included on the form, which you should report on your tax return as tax withheld.
Box 5: Lists trade adjustment assistance (RTAA) payments, which should be reported as income on your tax return.
Box 6: Shows taxable grants from federal, state, or local governments.
Box 7: Reports Department of Agriculture payments.
Box 8: If checked, the amount in Box 2 is attributed to an income tax that applies exclusively to income from a trade or business.
Box 9: Reports market gain on Commodity Credit Corporation (CCC) loans or certificates.
Boxes 10a–11: State income tax withheld reporting boxes.
Form 1099-G: Payer's info
This part of the form is designated for the payer's information. On this section of IRS Form 1099-G, the entity or individual responsible for issuing the form (the payer) must provide their full legal name, street address including city or town, state or province, country, ZIP or foreign postal code, and telephone number.
Here are some tips for filling out this section:
Use the legal name of the entity: If the payer is a business, the name should match the one registered with the IRS or on the business's tax return.
Include a complete address: Make sure the street address is complete and includes any relevant suite or apartment numbers.
Verify the address before filling it out: Double-check the address for any errors, as it is essential for contact and record-keeping purposes.
Provide an accurate phone number: The telephone number is crucial in case the IRS or the recipient of the form needs to contact the payer for any clarification.
Print clearly: Fill out the form in legible, capital letters to make it easy to read and to avoid any misinterpretation.
Follow IRS guidelines: Consult the IRS instructions for Form 1099-G to ensure all information conforms to the standards and requirements.
Remember, accurate and complete information helps prevent processing errors and potential issues for both the payer and the recipient of the form.
Form 1099-G: TIN
When sending out payee statements, you can shorten the recipient's Taxpayer Identification Number (TIN), which could be their Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN), or Employer Identification Number (EIN). This is according to the IRS regulations. However, you can't use a shortened TIN on any documents you submit to the IRS. Also, remember you cannot shorten your own TIN (the payer's TIN) on any forms. For more details on this, you should look at part J of the General Instructions for Certain Information Returns. In the "2nd TIN Not." box, you can put an "X" if the IRS has informed you twice within three years that the taxpayer has given an incorrect Taxpayer Identification Number (TIN). Marking this box means the IRS won't send you more notices about this issue for this account.
However, don't check this box if both notices from the IRS came in the same year, or if they were for returns filed for the same year but received in different years. In these cases, it's treated as one notice, not two, and you don't need to send a second "B" notice to the taxpayer after the second IRS notice. For more details, see part N of the General Instructions for Certain Information Returns.
There's also a TIN Matching System provided by the IRS that can be helpful. You can find more about this in the section titled "Items You Should Note" in the General Instructions for Certain Information Returns.
It's important to be aware that there has been a significant increase in fraudulent unemployment claims. Criminals are using identity theft (IDT) to illegally obtain benefits in various states.
Form 1099-G: Recipient Info
This is where the recipient of the form should enter their personal information. It includes fields for the recipient's name, street address (including apartment number if applicable), and the city, town, state or province, country, and ZIP or foreign postal code.
Here are some tips for filling out this section:
Recipient's Name: Enter the name of the individual or entity who is the recipient of the form as it appears on their tax return. Make sure to include the complete name including any suffixes (e.g., Jr., Sr., III), but do not include titles (e.g., Mr., Mrs.).
Street Address: Provide the full street address of the recipient's location. This should include the house number, street name, and apartment number if relevant. Be accurate, as this is where any correspondence or documentation related to the form will be sent.
City, Town, State or Province, Country, and ZIP or Foreign Postal Code: Enter the city or town name, the state or province, and the appropriate ZIP code or foreign postal code. If the recipient is outside the United States, include the country name.
Ensure all the information is current and correct to avoid any issues with delivery or processing of the form. If the IRS needs to make contact or send any additional forms, they will use this address, so it is essential that the information be accurate and legible.
Form 1099-G: Account Number
If you're filing multiple Form 1099-Gs for the same person because they have more than one account with you, you need to include an account number on each form to tell them apart. The IRS also suggests that you put an account number on every Form 1099-G you file, even if it’s just one form for a person. This makes it easier to keep track of forms. For more information on this, check out part L of the General Instructions for Certain Information Returns.
Form 1099-G: Unemployment Compensation
This is where you report unemployment compensation. This part of the form is used to report the amount of unemployment benefits the taxpayer received during the tax year, which is considered taxable income by the federal government.
Form 1099-G: State or local income tax refunds, credits, or offsets
Put down any state or local income tax refunds, credits, or offsets of $10 or more that you gave to people. This includes money given back from overpaid taxes due to refundable state tax credits, as well as any bonus payments from existing state tax laws managed by the state's tax office. Examples are credits for filmmakers, improvements in low-income areas, or installing solar panels. If a state pays these out or allows them to be used to lower next year's taxes, they should be reported in box 2.
Don't include in box 2 any payments that aren't for state income tax refunds, credits, or offsets. This includes money from state grants or support programs, which should be reported in box 6.
If the people who got the refunds or credits had deducted those state or local taxes on their federal tax returns, the money they get back might be taxable for them. You don’t need to give them a copy of Form 1099-G if you know they didn’t itemize deductions on their federal return for the year that led to the refund, credit, or offset. But, you still need to send Form 1099-G to the IRS.
Taxes paid on dividends, capital gains, or the income of unincorporated businesses are considered income taxes. Refunds, credits, or offsets of these taxes of $10 or more should be reported on Form 1099-G. If you know the person didn’t itemize deductions, you don’t need to give them a copy of the form for dividends or capital gains taxes. However, for the tax on business income, you must give them a copy since this tax is specifically for business income.
If you pay $600 or more interest on any refund, you must file a Form 1099-INT for the interest and give a copy to the person who received it. For interest less than $600, you can report it on Form 1099-G if you choose.
Form 1099-G: Box 2 Amount for Tax Year
In box 2 of Form 1099-G, enter any state or local income tax refunds, credits, or offsets of $10 or more that you've given out. This includes money given back because of overpaid taxes due to refundable state tax credits and any bonus payments made under state tax laws. Examples of such state programs include credits for filmmakers, home improvement in low-income areas, and installing solar panels. Report these in box 2 if they're paid out or allowed to be carried forward to the next tax year by the state tax agency.
Don't include in box 2 any payments that aren't related to state income tax refunds, credits, or offsets. This might include payments from state grants, incentives, subsidies, or other assistance programs. Instead, report taxable grants in box 6.
If the people who received these refunds or credits had deducted the related state or local taxes on their federal tax returns, the refunds, credits, or offsets might be taxable for them. If you can tell they didn’t itemize deductions on their federal return for the year related to the refund, credit, or offset, you don’t have to give them a copy of Form 1099-G. But you still need to file the form with the IRS.
Refunds, credits, or offsets of $10 or more for taxes on dividends, capital gains, or the income of unincorporated businesses are also reportable on Form 1099-G since these are considered income taxes. If the person didn't itemize deductions, you don't need to give them a copy of the form for dividends or capital gains taxes, but you must provide a copy for the tax on unincorporated business income.
If you pay $600 or more in interest on the refund, file Form 1099-INT for the interest and give a statement to the person who received it. For interest less than $600, you can report it on Form 1099-G if you choose.
You don't need to put anything in box 3 if the money being given back, whether it's a refund, credit, or offset, is for the tax year you're currently in. But if it's for a different tax year, then you should write down the year that the refund, credit, or offset applies to. Make sure to write the full year in the format of four digits, like "2020," not just "20." If you have amounts that apply to more than one tax year, then you need to use a separate Form 1099-G for each year you're reporting.
Form 1099-G: RTAA Payments
Write down any payments of $600 or more that you made to qualified individuals as part of the Reemployment Trade Adjustment Assistance (RTAA) program.
For payments that go in box 5, 6, or 7, you should include backup withholding. Backup withholding is a tax that you, as the payer, must take out from the payment at a rate of 24% in cases where the recipient hasn’t given you their Taxpayer Identification Number (TIN) or if the IRS has told you that the TIN provided is wrong (you'd get a Notice CP2100 or CP2100A for this). For more details on when and how to apply backup withholding, you can check out part N of the General Instructions for Certain Information Returns.
If someone has chosen to have federal income tax taken out of their unemployment payments, loans from the Commodity Credit Corporation (CCC), or certain payments due to crop disasters, you should record this voluntary withholding as well. In case you withheld state income tax, you can find out how to report this by looking at Boxes 10a Through 11 instructions.
A key point to remember is that you cannot apply voluntary withholding to Reemployment Trade Adjustment Assistance (RTAA) payments. It’s not allowed for these types of payments.
Form 1099-G: Taxable Grants
Record any sum from a taxable grant given by a federal, state, or local initiative aimed at subsidizing energy financing or supporting projects that save or generate energy, limited to those concerning energy-specific properties or residences within the United States. Include as well any taxable grant amounts provided by Native American tribal governments.
Any other taxable grants totaling $600 or more should also be reported. Generally, grants from state and local governments are taxable under federal tax laws. A grant from the federal government is typically considered taxable unless the grant's authorizing legislation specifies exemption. However, do not include any amounts related to scholarship or fellowship grants. For guidance on scholarships, refer to the instructions for Forms 1099-MISC and 1099-NEC.
When filling out this section of the form, the individual or entity responsible for issuing the grant should accurately enter the total amount of taxable grants paid to the recipient during the tax year. Here are some tips for filling out this section:
- Ensure that only grants that are considered taxable income are included in this field.
- Double-check the amount to ensure it matches the organization's financial records for the payments made to the recipient.
- If the form is being completed by the recipient, confirm the amount with any official grant documentation or financial statements provided by the grantor.
- Consult with a tax professional or the IRS instructions for Form 1099-G to determine the taxability of the grants you received.
- Keep a detailed record of all grant funds received throughout the year to make reporting easier during tax season.
Form 1099-G: Agriculture Payments
Write down any agricultural subsidy payments you made during the year from the U.S. Department of Agriculture (USDA), including those from the market facilitation program. If you're a nominee (meaning you received these subsidy payments on behalf of someone else), you need to file Form 1099-G. On this form, report the person who actually owns these payments and include the amount of the payments in box 7.
Form 1099-G: Market Gain
This section is intended for reporting any market gains associated with certain kinds of income or benefits. Report the market gain associated with the repayment of a CCC loan whether repaid using cash or CCC certificates.
Form 1099-G: Box 10a, 10b, 11 State
This section explains that there are certain parts of the form that are meant for those who take part in a special program where federal and state tax information is filed together, or for those who need to send paper forms to their state tax office. You don't have to fill these parts out for the IRS, but they're there to make things easier if you need to report your earnings to more than one state.
Here's what to do with these boxes:
Box 10a: Write down the short, standard abbreviation for the state. Box 10b: Put in the unique number the state has given you for tax purposes. Box 11: If any state tax was taken out of your payments, write down how much. If your state asks for a paper copy of this form:
- Copy 1: Send this to the state tax department.
- Copy 2: This one is for you to keep and use when you're doing your state taxes. For more details on the Combined Federal/State Filing Program, there's a guide called Publication 1220 you can check out. This program simplifies the process for the filer by allowing them to send tax information to both federal and state tax authorities at the same time.
When filling out your state's payer identification number, you should:
Obtain the appropriate state identification number from the agency that issued the payment. This number is typically provided by the state government and is unique to the agency or department that made the payment.
Enter the number accurately into the form field.
Double-check to ensure that the number matches the documentation provided by the state agency.
Make sure not to confuse this number with your personal identification number or any federal identification numbers. The state identification number is specific to the state agency that issued the payment being reported on the Form 1099-G. If you are unsure of the correct state identification number to use, you should contact the issuing state agency for clarification.
Form 1099-G: Federal Income Tax Withheld
In Box 4, titled "Federal Income Tax Withheld," you need to handle two types of withholding:
Backup Withholding: If you're required to report payments in boxes 5, 6, or 7 and the recipient hasn't given you their Taxpayer Identification Number (TIN) or the IRS has informed you that the TIN is incorrect (via Notice CP2100 or CP2100A), you need to withhold tax at a 24% rate. This is known as backup withholding. For more details on when and how to apply backup withholding, check part N of the General Instructions for Certain Information Returns.
Voluntary Withholding: Here, you enter any federal tax you voluntarily withheld from unemployment compensation, Commodity Credit Corporation (CCC) loans, and certain payments related to crop disasters. If you also withheld state income tax, refer to Boxes 10a through 11 for state information. Note that you aren't required to report this state withholding to the IRS.
It’s important to note that voluntary withholding is not allowed for Reemployment Trade Adjustment Assistance (RTAA) payments.
Form 1099-G: box 2 is trade or business income
Put an "X" in box 2 if it shows money you got back, a discount, or an amount that made up for income tax you paid on money you earned from your own business or freelance work. This doesn't refer to the regular income tax that everyone pays; it's a special kind of tax that only applies to business income. If that's what box 2 is about, then you mark it with an "X".