A 1099-G reports government payments you received during the year

A 1099-G is a tax form that reports certain payments the government sent you. The most common reason you'll receive one is unemployment benefits — but it also covers other government information like state tax refunds, agricultural payments, and some disaster relief. The government agency that paid you is required to send you a 1099-G by January 31, and they send a copy to the IRS at the same time.

The form itself is straightforward: it lists the type of payment in Box 1a, 1b, or 5, and the dollar amount in the corresponding box. Your job is to report that income on your tax return in the right place. The tricky part isn't the form — it's understanding whether that income is actually taxable, and whether you should have had taxes withheld when you received it.

Key Takeaways

  • Unemployment benefits shown on a 1099-G are taxable income and must be reported on your return, though you may be able to exclude part of it under the American Rescue Plan rules.
  • State tax refunds are generally not taxable, but the 1099-G still reports them, so you need to know when to exclude them from your income.
  • You can request federal tax withholding when you receive unemployment benefits, which reduces what you owe at tax time.
  • If you received a 1099-G but didn't actually get the money — for example, because it was offset to pay a debt — you may be able to dispute the amount with the issuing agency.

Unemployment benefits are the most common reason for a 1099-G

If you collected unemployment during the year, your state's unemployment office will send you a 1099-G showing the total amount you received in Box 1a. That income is taxable and must be reported on your federal return. Many people are surprised by this because unemployment feels like a safety net rather than income, but the IRS treats it as taxable wages.

The American Rescue Plan, which was in effect for 2020 and 2021, allowed you to exclude up to $10,200 of unemployment benefits from your taxable income if your modified adjusted gross income was under $150,000. That provision has expired, so unemployment received in 2022 and later is fully taxable. If you received unemployment in 2020 or 2021 and did not claim the exclusion on your original return, you may be able to file an amended return to reduce your tax liability.

When you first file for unemployment, most states ask whether you want federal income tax withheld from your benefits. If you said yes, the amount withheld appears in Box 2 of your 1099-G. If you said no, you receive the full amount but owe tax on it when you file. The withholding rate is usually 10 percent, which may not cover your full tax liability — it depends on your other income and filing status.

State tax refunds on a 1099-G are usually not taxable

Box 2 of the 1099-G sometimes reports a state income tax refund. This creates confusion because the form reports it as income, but you generally cannot deduct state taxes on your federal return (the SALT cap limits state and local tax deductions to $10,000 per year). The result is that a state refund is not taxable income on your federal return.

The IRS knows this, which is why the instructions for Form 1040 tell you to subtract any state tax refund shown on a 1099-G before you report it as income. You will not owe federal tax on the refund itself. However, if you itemized deductions in the year you paid the state tax, you may have to recalculate that deduction to account for the refund you later received — this is a technical issue that affects only people who itemize.

Other government payments reported on a 1099-G

Box 5 of the 1099-G reports agricultural payments, such as crop insurance proceeds or conservation program payments. These are taxable income and must be reported on Schedule F if you are a farmer, or on your return as other income if you received them for a different reason.

Box 6 reports disaster relief payments. Most disaster relief is not taxable — the IRS excludes payments made under a federal disaster declaration. However, if the payment is for lost business income or replaces wages, it may be taxable. The agency that sent the payment should tell you whether it is taxable; if you are unsure, you can contact the IRS or a tax professional.

Some states also use the 1099-G to report other payments, such as property tax credits or rebates. These vary by state and are not always taxable. Check your state's tax instructions or contact your state tax agency if you receive a 1099-G for a payment you do not recognize.

What to do if the amount on your 1099-G is wrong

If the 1099-G shows an amount you did not receive — for example, because your benefits were reduced to pay back an overpayment or offset a debt — contact the agency that issued the form. Most states allow you to request a corrected 1099-G if the amount is wrong. You will need to provide documentation, such as a letter from the agency showing the offset or a copy of your benefit statement.

If the agency issued the 1099-G but you genuinely did not receive the money, ask them to issue a corrected form showing the actual amount you got. Keep a copy of their response in case the IRS questions the difference between the 1099-G and what you reported on your return. If you reported less income than the 1099-G shows, the IRS computer will flag it, and you may receive a notice asking you to explain the difference.

How to report a 1099-G on your tax return

Unemployment benefits go on Line 19 of Form 1040 (labeled "Unemployment compensation"). If you are excluding part of your unemployment under the American Rescue Plan rules, you subtract that amount before you enter the number on Line 19. The worksheet in the Form 1040 instructions walks you through this calculation.

State tax refunds and other payments in Box 2 or Box 5 go on Line 21 ("Other income"). If you are using tax software, it will usually prompt you to enter the 1099-G information, and the software will place each amount in the right spot on your return. If you are filing by hand, refer to the Form 1040 instructions for the current year, because the line numbers and boxes change occasionally.

Keep your 1099-G with your tax records for at least three years. The IRS has a copy, so if you report a different amount, you want to be able to explain why.

Frequently Asked Questions

Do I have to report a 1099-G if I did not owe taxes?

Yes. You must report all income shown on a 1099-G, even if your total income is low enough that you do not owe tax. The IRS matches the 1099-G to your return, and if you do not report it, the IRS computer will send you a notice. It is easier to report it upfront than to respond to a notice later.

Can I claim a loss if I had to repay unemployment benefits?

No. If you received unemployment but had to repay it because of an overpayment, you report the gross amount on your return and cannot deduct the repayment as a loss. However, if you repaid more than $3,000 in the same year you received it, you may be able to claim a credit instead of a deduction — check the Form 1040 instructions for the year you repaid it.

What if I did not receive a 1099-G but I got unemployment?

Contact your state's unemployment office and ask them to send you a copy. They are required to issue one by January 31. If it is already February or later and you have not received it, call the office directly — sometimes they mail to an old address or the form gets lost. You can also ask them to provide the amount over the phone so you can report it on your return while you wait for the form.

Is the 1099-G the same as a W-2?

No. A W-2 reports wages from an employer and shows taxes withheld. A 1099-G reports government payments and may or may not show taxes withheld. They go on different lines of your return and are issued by different entities.

Do I need to file a return if my only income is a 1099-G?

It depends on the amount and your filing status. If your only income is unemployment benefits, you must file if the amount exceeds the standard deduction for your age and filing status. Check the Form 1040 instructions for the current year to find your threshold. When in doubt, file — it is safer than not filing and risking an IRS notice.