Certain Government Payments - Form 1099-G

Those who received payments from either the federal, state, or local government during the year should receive a Form 1099-G, listing the amount they received.

The government payments that merit a Form 1099-G include:

unemployment compensation from the federal, state, or local government.

state or local income tax refunds, credits, or offsets

alternative trade adjustment assistance (ATAA) payments

reemployment trade adjustment assistance (RTAA) payments

taxable grants

agricultural payments

Form 1099-G’s major tax function is in reporting unemployment benefits. Unemployment benefits are considered taxable income. You may be required to report the amount from your 1099-G on your tax return and pay taxes on that amount.

The information on your 1099-G is sent to the IRS and your state’s tax authority, so you run the risk of penalties and an audit by not reporting it.

Note that some states, most notably New York, no longer mail out copies of Form 1099-G. You will have to view your form online in order to get the necessary information.