Form 1099-G is the tax form for certain payments by federal, state or local governments, including unemployment compensation, agricultural payments and taxable grants, according to the Internal Revenue Service. Governments file a 1099-G if they paid state or local income tax offsets, credits, refunds or reemployment trade adjustment assistance payments.
Governments that received payments on Commodity Credit Corporation loans also file Form 1099-G, notes the IRS. For individuals receiving unemployment compensation from their state governments, the amount they received appears in Box 1 on Form 1099-G, explains Intuit TurboTax. State tax refunds and offsets appear in Box 2 on the form. Individuals do not have to attach Form 1099-G to their tax returns.