Form 1099-G reports a payment that a government agency made to you during the year. Most people see it for unemployment compensation or a state tax refund. The IRS gets a copy too, and you need the form to report that income correctly on your federal return. A city, county, state, or federal agency sends this form, not an employer or a private business. That surprises many people who only expect tax forms from a job or a client.
Key Takeaway: Form 1099-G reports government payments like unemployment benefits or state tax refunds, and most recipients need it to file an accurate return. Keep it with your other tax papers even if you already know the amount, because the IRS has a matching copy on file.
What It Is
Form 1099-G is called “Certain Government Payments.” It lists money a government agency paid you or credited to you during the tax year. The form covers several kinds of payments, and each one lands in a different numbered box. Unemployment compensation goes in Box 1. A state or local income tax refund, credit, or offset goes in Box 2, but only when you itemized deductions the prior year and claimed those taxes as a write-off. Other boxes cover farm subsidy payments, taxable grants, and market gain on loan repayments.
Agencies must send Form 1099-G to anyone who received $10 or more in unemployment compensation. They also must send it for a taxable state refund of any amount if that refund affects your federal return. Agencies must give you the form by January 31. They must file copies with the IRS by the end of February on paper, or by March 31 if they file electronically. This applies to the 2027 filing season, which covers payments made during 2026.
Who It Applies To
Anyone who collected unemployment benefits during the year will likely get this form from their state workforce agency. That group includes people who filed a regular state unemployment claim, people in certain state disability programs that count as unemployment compensation, and workers who received extended benefits during a slow economy.
Taxpayers who received a state or local tax refund may also get a 1099-G. This only matters for your taxes if you deducted state and local taxes on last year’s federal return using Schedule A. If you claimed the standard deduction last year, your refund usually isn’t taxable. The agency may still send the form, even though you won’t owe extra tax because of it.
Businesses receive a 1099-G too, though less often than individuals. Farmers who got USDA agricultural subsidy payments fall under this rule. So do companies that received a taxable grant from a government program. A small business that got a state economic development grant, for example, should expect that income reported on a 1099-G rather than a 1099-NEC or 1099-MISC. Local governments sometimes issue disaster relief or recovery grants after a storm or flood, and those payments can also show up on this form if the program treats them as taxable.
Requirements
Government agencies must confirm the recipient’s name, address, and taxpayer ID before they issue the form. This works the same way as any other information return. They must report each payment type in the correct box, and they must file electronically once they cross the 10-return threshold that now covers nearly every filer under the IRS e-file rule.
Recipients must report the income on the right line of their federal return. Unemployment compensation goes on Schedule 1 as other income. A taxable state refund also goes on Schedule 1, but only the part that produced a tax benefit the prior year. If you’re unsure how much of a refund counts as taxable, the IRS Instructions for Form 1099-G include a worksheet that walks you through the math step by step.
For general guidance that applies across every 1099 form type, including filing deadlines and correction steps, see WageFiling’s general instructions for filing a 1099 form. State agencies follow many of the same core IRS rules, even though a 1099-G comes from a government source instead of a private payer.
Common Mistakes
Many taxpayers assume a 1099-G doesn’t matter because “it’s just my own refund coming back.” That assumption often triggers an underreported-income notice, since the IRS already has a copy and its computer system flags any mismatch through an automated matching program. Report the exact amount shown on the form, even when it feels like your own money returning to you.
Identity theft can also produce a fake 1099-G. If you never applied for unemployment but received a form reporting benefits, someone likely filed a claim using your stolen information. Report this to your state unemployment office right away and ask for a corrected form. The IRS will still expect your return to match the original filing unless the state fixes its records first.
Mixing up which box applies to which payment causes errors too. Some filers report the full Box 2 amount as taxable income without checking whether they itemized deductions the prior year. That mistake can overstate your tax bill by a meaningful amount.
Best Practices
Save every 1099-G as soon as it arrives, and keep it with your other tax documents. Compare the amount against your own unemployment claim records or refund notice well before you file, so you can catch a discrepancy early.
Check your state’s online unemployment portal if you aren’t sure whether a 1099-G is coming. Most states now post digital copies there before the mailed version even arrives. That helps you start your return sooner instead of waiting on postal delivery.
If your business receives a taxable grant reported on a 1099-G, talk with a tax preparer or accountant who understands how that income fits with your other business deductions. Grant income sometimes qualifies for special treatment depending on the program, so professional guidance helps you avoid over- or under-reporting. Keep a simple spreadsheet or folder that tracks each 1099-G by year, payer, and box amount, so you can pull it up quickly if the IRS ever asks a question.
How WageFiling Helps
WageFiling focuses on making information return filing simple for businesses that issue 1099s to contractors, vendors, and other payees. Government agencies handle their own 1099-G filings directly, so WageFiling doesn’t file that specific form on an agency’s behalf. Many WageFiling clients still receive 1099-G forms themselves, whether from unemployment benefits, a state refund, or a farm payment. Our platform’s clear filing guidance helps them see how that income fits alongside the 1099s their own business issues.
Our support team also answers questions about how a 1099-G interacts with the 1099-NEC or 1099-MISC forms your business already files. That way you get one consistent, accurate picture of your reporting duties across every form type you deal with each year.
Conclusion
Form 1099-G exists so government agencies can report payments like unemployment compensation, taxable refunds, and grants to both you and the IRS. Recipients should never ignore this form just because it comes from a government source instead of an employer. Compare it against your own records, report the correct amount on Schedule 1, and watch for signs of identity theft if you get a form for benefits you never claimed. Staying on top of this small but important document keeps your tax return accurate. It also helps you avoid an unexpected notice from the IRS later in the year.
Frequently Asked Questions
Is a state tax refund reported on Form 1099-G always taxable?
No. A state or local tax refund is only taxable if you itemized deductions on your federal return the prior year and deducted state and local taxes. If you claimed the standard deduction instead, the refund usually isn’t taxable, even though the agency still reports it to you and the IRS.
What should I do if I receive a 1099-G for unemployment benefits I never claimed?
Contact your state unemployment agency right away to report suspected identity theft and ask for a corrected form. The IRS still expects your return to match the original filing unless the state issues a correction, so acting quickly protects you from a mismatched-income notice.
Do businesses ever receive Form 1099-G instead of a 1099-NEC or 1099-MISC?
Yes. Businesses that receive taxable government grants or farm subsidy payments get a 1099-G rather than a 1099-NEC or 1099-MISC. Those other two forms cover payments from private payers, not government agencies, so the source of the payment decides which form you receive.
This article is for general informational purposes only and does not constitute legal or tax advice. Every business and individual’s situation is different, so consult a qualified tax professional or attorney before making decisions based on this information.
