What Is Form 1099-G? Unemployment, Refunds, and Filing

Form 1099-G is an information return a government agency sends you to report taxable payments it made to you during the prior calendar year, most often unemployment benefits or a state or local tax refund. It also covers taxable grants, agricultural subsidies, and certain trade adjustment payments. The agency sends one copy to you and one to the IRS, so the figures on the form need to match what you put on your return.

Who Sends You a 1099-G and When It Arrives

Any federal, state, or local government agency that paid you $10 or more during the year has to issue a 1099-G.¹ In practice, the two agencies most people hear from are their state unemployment office and their state department of revenue.

The form has to be in your hands by January 31 of the year after the payments were made.² If February arrives and nothing has shown up, contact the paying agency directly. Many states also post the form in an online account you can log into. You are still responsible for reporting the income even if the paper copy never reaches you, because the IRS already has its copy.

Box 1: Unemployment Compensation

Box 1 shows the total unemployment benefits paid to you during the year, including benefits paid to former federal employees and ex-military personnel.³ Collected benefits from more than one state during the year? You’ll get a separate 1099-G from each one, and you’ll combine the Box 1 figures when you file.

All unemployment compensation is fully taxable at ordinary federal income tax rates.⁴ There is no threshold below which the income escapes tax. State treatment is a separate question — a handful of states exempt unemployment benefits from state income tax, so check your state’s rules before assuming you owe at both levels.

Box 2: State or Local Tax Refunds

Box 2 shows a state or local income tax refund, credit, or offset you received during the year.¹ A refund in Box 2 is not automatically taxable. Whether any of it counts as income on your federal return depends on what you did on last year’s return.

If you took the standard deduction last year, the Box 2 amount is not taxable at all. You never deducted those state taxes federally, so getting some back doesn’t create federal income.² The agency isn’t even required to send you a 1099-G in that situation, though plenty of them do anyway.¹

If you itemized last year, some or all of the refund may be taxable under the tax benefit rule. The taxable portion is the lesser of the refund itself or the amount by which your itemized deductions exceeded the standard deduction you could have taken that year. The idea is simple: you only pay tax on the piece of the refund that actually reduced your federal bill. The $10,000 cap on the state and local tax deduction in effect through 2025 means many itemizers couldn’t deduct everything they paid in state tax, which often shrinks or eliminates the taxable portion of a refund.⁵

What the Other Boxes Mean

Most people see entries only in Box 1 or Box 2. If one of the other boxes has a figure in it, here’s what it’s telling you.

Box 3 — Tax Year: Identifies which year the Box 2 refund relates to. Blank means the refund is for the most recent year; a year appears here only when the refund covers an older year.⁶
Box 4 — Federal Income Tax Withheld: Federal tax already withheld from your payments, either voluntary withholding on unemployment or backup withholding on other payments. It reduces your tax bill dollar for dollar.¹
Box 5 — RTAA Payments: Reemployment Trade Adjustment Assistance payments of $600 or more to workers displaced by foreign trade competition.³
Box 6 — Taxable Grants: Taxable government grants, including energy conservation grants. State and local grants are generally taxable; federal grants are taxable unless the authorizing legislation says otherwise. The reporting threshold is $600 for most grants.¹
Box 7 — Agricultural Payments: USDA agricultural subsidy payments, including market facilitation program payments. Farmers report this on Schedule F.¹
Box 8 — Trade or Business Checkbox: If checked, the Box 2 refund came from a tax that applies only to trade or business income, and you report it on Schedule C or F rather than Schedule 1.³
Box 9 — Market Gain: Market gain from repaying a Commodity Credit Corporation loan, whether repaid in cash or with CCC certificates.¹
Boxes 10a, 10b, and 11 — State Information: The state, the filer’s state ID number, and any state income tax withheld. These are for state reconciliation and don’t affect your federal return.¹

Where Each Amount Goes on Your Return

Most 1099-G income passes through Schedule 1 before reaching your Form 1040. Unemployment compensation from Box 1 goes on Schedule 1, Line 7.⁷

A taxable state or local refund from Box 2 goes on Schedule 1, Line 1.⁷ Use the Line 1 instructions and the state and local tax refund worksheet to figure the taxable portion. If you took the standard deduction last year, you can skip this step because no part of the refund is taxable.

Federal tax withheld in Box 4 skips Schedule 1 and goes straight to the Payments section of Form 1040, where it joins withholding from your W-2 and anywhere else. RTAA payments from Box 5 go on the “Other income” line of Schedule 1, and agricultural payments from Box 7 go on Schedule F.³

Because the IRS gets its own copy of your 1099-G, automated matching catches figures left off a return. If you believe an amount isn’t taxable, the safer move is to report it and let the worksheet produce a zero rather than omit it.

Avoiding a Surprise Tax Bill on Unemployment

Unemployment benefits do not come with automatic withholding the way a paycheck does. Collect for several months without planning for the tax, and April can bring an unwelcome balance due. Two options prevent that.

The first is voluntary withholding. File Form W-4V with your state unemployment agency and the state will withhold a flat 10% from each payment.⁸ That 10% rate is the only choice for unemployment; you can’t pick a different percentage.

The second is quarterly estimated payments directly to the IRS.⁴ Estimated payments give you more control over the amount, which helps if other income pushes you into a higher bracket. Without withholding or estimated payments, owing more than $1,000 at filing can trigger an underpayment penalty on top of the tax itself.

If the Form Is Wrong or You Never Got the Benefits

If the figure on your 1099-G is wrong, contact the issuing agency rather than the IRS. The IRS cannot change another entity’s information return. Ask for a corrected form and keep records of every contact in case the fix takes time.

A different problem is receiving a 1099-G for unemployment benefits you never applied for. Fraudulent claims filed with stolen identities surged during the pandemic and remain common. Report the fraud to the state agency that issued the form and request an amended 1099-G showing zero benefits.⁹ Most states run a dedicated fraud-reporting portal for exactly this.

If the corrected form hasn’t arrived by the time you need to file, file an accurate return reporting only the income you actually received.⁹ Don’t miss the deadline waiting for the correction. Also file Form 14039, the Identity Theft Affidavit, with the IRS; you can complete it online or print and mail it. The IRS identity theft hotline at 800-908-4490 can help if you get stuck.¹⁰

1
Internal Revenue Service. Instructions for Form 1099-G (03/2024)
2
Internal Revenue Service. About Form 1099-G, Certain Government Payments
3
Internal Revenue Service. Form 1099-G (Rev. March 2024) Certain Government Payments
4
Internal Revenue Service. Unemployment Compensation
5
Internal Revenue Service. Revenue Ruling 2019-11, Section 111 Recovery of Tax Benefit Items
6
Internal Revenue Service. Instructions for Form 1099-G (Rev. March 2024)
7
Internal Revenue Service. 2025 Schedule 1 (Form 1040)
8
Internal Revenue Service. Form W-4V (Rev. January 2026) Voluntary Withholding Request
9
Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect
10
Internal Revenue Service. Reporting Identity Theft