What Is Form 1099-G?

Form 1099-G reports certain government payments — most commonly unemployment compensation (Box 1) and state income tax refunds (Box 2). Unemployment benefits are fully taxable at the federal level and must be reported on your return. A state tax refund is only taxable if you deducted state income taxes (itemized) in the prior year. You should receive your 1099-G by January 31. Watch out for identity theft — fraudulent unemployment claims can result in a 1099-G in your name for benefits you didn't receive.