Form 1099-G, Certain Government Payments is provided to a taxpayer that has received certain government payments. These payments should be addressed when filing the tax return and may be considered taxable income. The following items are reported on Form 1099-G.
Unemployment Compensation (Box 1). If the taxpayer received unemployment, they should receive a Form 1099-G reporting this unemployment as income.
State or local income tax refunds (Box 2), credits, or offsets. If the taxpayer received a refund of state or local income taxes from last year’s tax return, they may receive a Form 1099-G reporting this refund as income. If the taxpayer had itemized deductions on their federal return including deducting the state or local income taxes, the refund may be considered taxable income;
Reemployment trade adjustment assistance (RTAA) payments (Box 5), consists of payments of $600 or more that were paid to eligible individuals under the Reemployment Trade Adjustment Assistance program. This item is reported as Other Income on the 1040.
Taxable grants (Box 6). This item is reported as Other Income on the 1040 unless the item relates to an activity for which the taxpayer is required to file Schedule C, C-EZ, E, or F or Form 4835. In such situations, the taxpayer would report the taxable or deductible amount allocable to the activity on that schedule or form instead.
Agricultural payments (Box 7). This item typically represents subsidy payments made to farmers or fisherman. This item is typically reported on Schedule F. See Instructions for Schedule F and Publication 225 – Farmer’s Tax Guide for detailed instructions.
NOTE: This is a guide on entering 1099-G, Certain Government Payment items into the Keystone Tax Solutions program. This is not intended as tax advice.