Form 1099 G: What Is It, and What Does It Mean for Your Tax Return?
For millions of Americans, filing taxes is one of the most complicated and stressful tasks of the year. Digging through old receipts, repeatedly checking your mailbox for tax forms, filling out documents – it can all feel overwhelming. Enter Form 1099-G (which is subtitled “Certain Government Payments”).
Form 1099-G is a tax form that contains information that can have a bearing on how you file your taxes and the amount of income that you’ll need to report on your tax return. You’ll use it in different ways depending on whether you itemize your taxes or claim the standard deduction. If you’re anticipating receiving this form — or if you’ve already received one — learn more about how it might affect the way you file your taxes.
What Is Form 1099-G?
Form 1099-G Certain Government Payments is a federal tax form that was created by the IRS. The form is available online, and it looks similar to other 1099 forms, such as the 1099-NEC. 1099 forms are those used to report income from sources other than wages, salaries or tips — information you’d find on a W-2 form from your employer. Instead, 1099 forms are used to summarize and track income that doesn’t fall within the traditional category of money you earned from a job that regularly deducts taxes.
The official title of this particular 1099 form is 1099-G Certain Government Payments because it details personal income you earned that came from the government in some way. In addition to its most common uses, Form 1099-G also reports payments people have received from federal loans for farmers, trade adjustments and taxable grants.
What Is Form 1099-G Used For?
Form 1099-G is used for keeping track of very specific types of compensation a taxpayer receives from the government. One form of this compensation — and one that commonly appears on a 1099-G — is unemployment income. This is money that the government paid you because you filed an unemployment claim after losing your job. Depending on local regulations and your personal choices, income from unemployment may or may not be taxed throughout the year.
Government entities also send Form 1099-G to taxpayers who have received certain tax refunds. Tax refunds are disbursed when tax withholdings you paid throughout the year-end up being greater than the taxes you actually owe. When this happens and you file taxes, the government refunds you the difference.
For example, suppose Janie had 7% of her income withheld for state taxes throughout the year. Upon filing her taxes, Janie realized that she only owed 5% of her income in state taxes. So, the state sent Janie a tax refund totaling 2% of her income for the year. That refund amount will be reflected on Form 1099-G, which the state will send Janie before that year’s taxes are due.
Form 1099-G is always sent to a taxpayer by a municipal, state or federal government. When a 1099-G includes unemployment income, the taxpayer must include that information on their tax returns. In the absence of unemployment income, a taxpayer may not have to include the information, depending on if and how they end up itemizing their taxes.
How To Report Unemployment Benefits On Form 1099-G
As far as taxes are concerned, unemployment payments are treated as income. Thus, any unemployment payments a taxpayer has received are also taxable as income. There are three ways of handling taxes on unemployment income: W-4 forms, quarterly tax filings and 1099-G forms.
A taxpayer can file a W-4 form — the document that states how much of your paycheck to withhold for taxes — with the government entity that pays them unemployment. In most states, this is their local Department of Revenue or Division of Employment Security. When someone files a W-4, taxes are deducted from each unemployment check just as they would be deducted from a paycheck at a job.
Taxpayers can also file quarterly taxes on unemployment income. This requires the taxpayer to file their own taxes at the end of each financial quarter. Filing deadlines for tax quarters are January 15, April 15, July 15 and September 15. The fourth quarter is paid in January of the following year. An unemployment recipient can also choose to receive their unemployment checks with zero taxes withheld throughout the year. Regardless of how you might choose to have your unemployment payments taxed (or not) throughout the year, tax filing is the time to “square up” with the IRS and pay any taxes that you end up owing on unemployment earnings.
If any taxes have been withheld from your unemployment payments, the amount that’s been withheld is reflected on Form 1099-G, along with the total unemployment compensation you received that year. If you received unemployment compensation you’ll want to pay special attention to Form 1099-G for the corresponding tax season. Your unemployment income must be included in your total income for tax purposes, and you should be sure to account for taxes that have already been withheld from unemployment compensation.
When to Report Form 1099-G
Government entities are responsible for filing Form 1099-G and distributing the document to taxpayers. Then, it’s up to each taxpayer to determine if and how the income on the form needs to be reported.
As a general rule, all income must be reported for tax purposes, and compensation from unemployment is considered income. The way this income is reported differs depending on whether you itemize deductions or claim the standard deduction.
Form 1099-G always lists the taxes that you’ve already paid on the types of income that make you eligible to receive a 1099-G, either through a W-4 or through quarterly filing, throughout the year. If you don’t itemize deductions, you’ll file the unemployment compensations paid less any withholdings you were already paid as income. If you itemize deductions, you need to file any taxes withheld from unemployment compensation on Form 1040 under the taxes paid section. If you opted not to have any taxes withheld on your unemployment compensation, you’ll need to file all of the compensation as income, regardless of whether you itemize your deductions or not.
Refunds on Form 1099-G may or may not need reporting. A refund is just that. It’s not income — it means you’re receiving money back for an overpayment. Hence, under normal circumstances, you don’t need to report the refund. However, there’s one circumstance in which you need to report a 1099-G refund. If in the previous tax year, you claimed your refund amount as a deduction against your federal taxes owed, you need to report the refund. This is usually not an issue for taxpayers who file a standard, rather than itemized, deduction. If you have any questions about this process, you might opt to contact a tax attorney for assistance.
Form 1099-G is an easy tax form to understand — it’s another way to track income that may need to be taxed. Tax professionals can easily provide help if you’re unsure how you should report any information on the Form 1099-G you’ve received.
