IRS Form 1099-G, titled "Certain Government Payments," is an information return used by federal, state, and local government agencies to report specific payments made to individuals during the tax year.
What Is IRS Form 1099-G?
IRS Form 1099-G is used by federal, state, and local government agencies to report specific payments made to individuals during the tax year. If you received 1099-G unemployment compensation, a state tax refund 1099-G, agricultural payments from the USDA, or taxable grants during the 2025 tax year, the issuing government agency is required to report those amounts to both you and the IRS. Government agencies must file Form 1099-G with the IRS and furnish a copy to the recipient by January 31 of the following year.
Types of Government Payments Tax Reported on Form 1099-G
Form 1099-G covers a broad range of government payments that may be taxable to the recipient. The most common type is unemployment compensation tax, reported in Box 1, which includes payments from state unemployment insurance programs, FUTA benefits, Railroad Unemployment Insurance Act benefits, and trade readjustment allowances. Box 2 reports state or local income tax refunds, credits, or offsets that may be taxable if the taxpayer itemized deductions in the prior year. Additional boxes report RTAA payments (Box 5), taxable grants (Box 6), and agriculture payments (Box 7) from USDA programs.
Box-by-Box Breakdown of Form 1099-G Fields
- Box 1 — Unemployment Compensation: Reports the total 1099-G unemployment benefits paid during the tax year. Fully taxable at the federal level and reported on Schedule 1 (Form 1040), Line 7.
- Box 2 — State or Local Income Tax Refunds, Credits, or Offsets: Only taxable on your federal return if you itemized deductions in the prior year and received a tax benefit from deducting state or local income taxes.
- Box 3 — Box 2 Amount Is for Tax Year: Indicates the tax year to which the refund, credit, or offset in Box 2 applies.
- Box 4 — Federal Income Tax Withheld: Shows any federal income tax withheld from your government payments. Claimed as a credit on your Form 1040.
- Box 5 — RTAA Payments: Reports Reemployment Trade Adjustment Assistance payments to older workers under the Trade Adjustment Assistance program.
- Box 6 — Taxable Grants: Reports taxable grants received from federal, state, or local government agencies. Includes business development grants, research grants, disaster relief grants exceeding actual losses, and other government-funded program payments.
- Box 7 — Agriculture Payments: Reports payments from USDA programs including CRP, ARC, PLC, emergency disaster payments, and CCC loans. Typically reported on Schedule F.
- Box 8 — Check if Box 2 Is Trade or Business Income: If checked, the state or local tax refund relates to a trade or business and should be reported on Schedule C.
- Box 9 — Market Gain: Reports market gain on CCC loans repaid at a price lower than the original loan rate.
- Box 10a — State: The abbreviated name of the state reporting the payment.
- Box 10b — State Identification Number: The filer's state identification number.
- Box 11 — State Income Tax Withheld: Reports any state income tax withheld from the payments.
Who Must File Form 1099-G?
Government entities at the federal, state, and local levels are responsible for filing Form 1099-G when they make reportable payments to individuals. The 1099-G filing requirements apply to state workforce agencies, state tax departments that report income tax refunds, the USDA for agricultural subsidy payments, and any government agency distributing taxable grants. The filing threshold is $10 or more in payments during the calendar year, although unemployment compensation reporting is required regardless of amount.
How 1099-G Unemployment Compensation Is Reported
Unemployment compensation tax is owed at the federal level on the full amount of benefits received. If you collected unemployment benefits, your state workforce agency will issue a 1099-G showing the total amount in Box 1 and any federal income tax withheld in Box 4. Even if you did not elect to have taxes withheld, the full amount of unemployment compensation received is still taxable. Some states also tax unemployment benefits at the state level.
How Unemployment Compensation Impacts Tax Brackets
Many taxpayers are surprised to learn that 1099-G unemployment benefits can push them into a higher federal tax bracket. Unemployment compensation is added to your other sources of income when calculating your AGI. Because the federal income tax system uses progressive brackets, a large unemployment payout may cause a portion of your total income to be taxed at a higher marginal rate.
To avoid a large tax bill at filing time, recipients of unemployment benefits should consider submitting IRS Form W-4V to request voluntary federal income tax withholding at a flat 10% rate, or making quarterly estimated tax payments.
State Tax Refund 1099-G Reporting
Box 2 of Form 1099-G reports state tax refund 1099-G amounts. However, not all state tax refunds are taxable on your federal return. A refund is only taxable if you itemized deductions on your federal return in the year the tax was originally paid and you received a tax benefit from deducting state or local income taxes. If you claimed the standard deduction, your state tax refund is generally not taxable.
Agricultural Payments and Taxable Grants
Box 7 reports agricultural payments under USDA programs including CRP, ARC, PLC, and emergency disaster payments. These are generally reported on Schedule F and subject to self-employment tax if the recipient is actively engaged in farming. Taxable grants in Box 6 include payments supporting small businesses, funding research projects, or providing disaster relief.
State-Specific Variations in 1099-G Reporting
- State income tax on unemployment: Nine states have no state income tax. Other states like California, Montana, New Jersey, Oregon, Pennsylvania, and Virginia fully exempt unemployment compensation from state income tax. The remaining states tax unemployment benefits as ordinary income.
- State refund taxability: Box 2 amount is only federally taxable if the taxpayer itemized deductions and received a tax benefit.
- Combined Federal/State Filing (CF/SF): Many states participate in this IRS program, allowing simultaneous filing.
- State-specific filing thresholds: Some states impose their own reporting thresholds and deadlines.
- Supplemental unemployment benefits: Certain states supplement federal programs with additional benefits.
1099-G Filing Requirements: Deadlines and Electronic Filing
Recipient copies must be furnished to taxpayers by January 31. For IRS filing, paper returns are due by February 28, while electronically filed returns have a later deadline of March 31. Any agency required to file 10 or more information returns during the calendar year must file electronically through the IRS FIRE system or IRIS portal. If an agency cannot meet the filing deadline, it may request an automatic extension by filing Form 8809.
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How to Report 1099-G on Tax Return Filings
1099-G unemployment compensation from Box 1 is reported on Schedule 1 (Form 1040), Line 7. Taxable state tax refund 1099-G amounts from Box 2 are reported on Schedule 1, Line 1, but only if you itemized deductions in the prior year. Agricultural payments from Box 7 are typically reported on Schedule F. Taxable grants from Box 6 may be reported on various lines depending on their nature. Federal income tax withheld in Box 4 is claimed as a credit on your Form 1040.
Penalties for Failing to File Form 1099-G
Government agencies that fail to meet 1099-G filing requirements on time face IRS penalties that accumulate quickly. The penalty amounts apply per form, so agencies filing large volumes of 1099-G returns face particularly steep exposure if they miss the deadline. Intentional disregard of the filing requirements results in even higher penalties with no maximum cap.
Corrections and Amended 1099-G Filings
If an error is discovered, the issuing agency must file a corrected return with the IRS and furnish an updated copy to the recipient as soon as possible. Common errors include incorrect payment amounts, wrong TINs, or reporting payments to the wrong individual — a growing concern as unemployment fraud cases have increased. To file a correction, submit a new 1099-G with the "CORRECTED" box checked.
