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If you receive unemployment benefits, expect to receive Form 1099-G

Lost-job_pink-slip

It's been a tough year for millions. In addition to worrying about keeping themselves and their families safe during the coronavirus pandemic, millions have lost their jobs.

But there may be a little bit of help for those relying on government payments as 2020 winds down.

The House and Senate are working on a compromise COVID-19 relief bill. It's huge and there still are congressional hurdles to overcome, but right now the proposal calls for a federal unemployment benefit of $300 a week for 16 weeks.

That's welcome news for the nearly 13 million Americans who, without Congressional help, are set to lose their unemployment benefits on Dec. 26. If the bill makes it into law, they would get the added federal money through April 19, 2021.

The proposal has two other notable unemployment segments.

It also would extend for the same time frame for two Coronavirus Aid, Relief and Economic Security (CARES) Act relief programs set to expire at the end of the year. The Pandemic Unemployment Assistance for gig workers, as well as the Pandemic Emergency Unemployment Compensation program that provides benefits to people whose state benefits have run out, also would extend through next April 19.

The plan is to attach this coronavirus relief bill — it's one of two being hashed out — to the federal funding bill that must be approved by Friday, Dec. 18.

Taxes due on unemployment: While the money is sorely needed by the millions who've lost jobs due to COVID-19's economic impact, they will have to pay tax on the benefits.

Unemployment compensation is taxable income.

Recipients have the option to have taxes withheld from the payments, but most don't. That's understandable. In the here-and-now when the money is needed, people who are getting the benefits need every available penny to help cover their living expenses.

Some folks do make the tax payments by filing estimated taxes. The Internal Revenue Service expects these quarterly payments on all taxable amounts that don't have any income tax withholding taken out when they are issued.

But as with the regular withholding from each benefit check, a lot of people overlook estimated filings related to unemployment.

That means they will owe taxes on the benefits when they report them net year on their annual Form 1040 filings.

That reporting is a must, since unemployment recipients will get a Form 1099-G with the government payments' details. And like other informational forms, the IRS will get a copy.

That's why 1099-G is this week's Tax Form Tuesday document.

1099-G basics: Form 1099-G looks a lot like others in the 1099 series.

1099-G_government payments info statement
For most folks, tax software or a tax pro will take care of entering the info on Form 1040. But it never hurst to know what's on the form you use in conjunction with your computer filing if you do your own taxes or how your tax preparer will of use the Form 1099-G.

Let's start with a look at front of the form.

It has specifics about the payer, which for unemployment benefits is the government entity that made the payment.

Then there's information about you, the unemployment benefits recipient and taxpayer. Double check that your name, address and tax identification number (usually your Social Security number) are correct.

When it comes to that Social Security number — or, in other taxpayer situations, an individual taxpayer identification number (ITIN) — you might see that only the last four digits of your number is showing. That's truncation is part of an ongoing IRS effort to protect taxpayers' identities from identity thieves.

Rest assured, however, that the 1099-G issuer has reported your complete taxpayer identity number to the IRS.

1099-G boxes: The right side of 1099-G has 11 boxes. Details on the info in each and how it should be used to file your annual tax return is detailed on the back of the form. Below is look at what the reverse of the 1099-G says about those entries.

Box 1. Here is where you'll find the total unemployment compensation paid to you this year. If you get more than on 1099-G, you can combine the box 1 amounts from all the form and report that amount on the unemployment compensation line of Form 1040 Schedule 1.

If you are married filing jointly, each spouse must figure his or her taxable amount separately.

If you made contributions to a governmental unemployment compensation program or to a governmental paid family leave program and received a payment from that program, the payer must issue a separate Form 1099-G to report this amount to you. If you itemize deductions, you may deduct your contributions on Schedule A as taxes paid.

If, however, you're like most taxpayers and instead claim the standard deduction, you only need to include in income the amount that is in excess of your contributions.

Box 2. This box shows refunds, credits or offsets of state or local income tax you received. That amount may be taxable to you if you itemized and claimed your state or local income tax as a Schedule A deduction.

Even if you did not receive the amount shown, for example, because (a) it was credited to your state or local estimated tax, (b) it was offset against federal or state debts, (c) it was offset against other offsets or (d) you made a charitable contribution from your refund, it is still taxable income if you deducted it.

And if you received interest on this amount, you also may get a Form 1099-INT detailing that interest amount. Those earnings also are taxable income that needs to be reported elsewhere on your tax return. The 1099-G (or your tax pro or tax software) has specifics on this.

OK, I know some of y'all are freaking out right now. You've regularly received a state tax refund and never paid tax on it. Chances are that's not a problem.

As long as you took the standard deduction on your federal return, the IRS doesn't care about your state tax refund. If you didn't use those state and local taxes as an itemized deduction to reduce your federal tax bill, then you don't have to worry about reporting the amount in box 2. For these standard deduction filers, your state tax refund isn't taxable.

Box 3. This just tells you which tax year for which the box 2 refunds, credits, or offsets shown were made. If there is no entry in this box, the refund is for the prior tax year. In this case, the 2020 Form 1099-G is for use in filing your 2019 taxes.

Box 4. If you requested that the payer withhold taxes or backup withholding was required on the payment — this kicks in when you don't give the payer your taxpayer identity number — that amount of tax is show in box 4. The amount in this box should be added to the amount of income tax withheld that your report on your Form 1040.

The next five boxes on 1099-G cover specific instances and don't apply to most taxpayers. But just in case, keep reading.

Box 5. The amount in this box is any reemployment trade adjustment assistance (RTAA) payments you received. It goes on the "Other income" line of your Form 1040 Schedule 1.

Box 6. Shows taxable grants you received from a federal, state, or local government.

Box 7. Shows your taxable Department of Agriculture payments. IRS Publication 225 and the Form 1040 Schedule F instructions (or your tax software or tax pro) have information about where individual filers should report this income. If it is in connection with a partnership, Form 8825 has more on how to report this amount.

Box 8. If this box is checked, the amount in box 2 is attributable to an income tax that applies exclusively to income from a trade or business and is not a tax of general application. If taxable, report the amount in box 2 on Form 1040's Schedule C or Schedule F, as appropriate.

Box 9. This is where any market gain on Commodity Credit Corporation (CCC) loans, whether repaid using cash or CCC certificates, is reported. More on these amounts can be found in the Form 1040 Schedule F instructions.

OK, almost done. And thankfully, back to more mundane information.

Boxes 10a, 10b and 11. We're back to basics with these final three entries on Form 1099-G boxes. This is where any withheld state income tax and information on the state is reported. It is, obviously, important when you file your state tax return.

Not just unemployment: As you can see from the discussion of the 1099-G specific box amounts, as well as its official name/descriptor as "Certain Government Payments," this form is not just for reporting unemployment.

But most of us get Form 1099-G when we get a state tax refund or, especially in this difficult 2020 tax year, we receive unemployment benefits.

In these cases, be on the lookout early next year for your 1099-G. It should arrive in your snail mail box by the end of January or early February. You'll need it correctly complete your tax return.

If you don't use it, you'll hear back from the IRS who will use its copy to compare to your return. That will likely lead to you owing more tax and associated penalties and interest.

And, of course, you'll want to keep the form in your tax records, just in case the IRS or your state tax department has questions later.

You also might find these items of interest:

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Comments

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Mariel

I have my form 1099G my box 1 unemployement compensation is $4,194 2box state or local income tax refund,credits or offset my credit i pay every month and i dont know the others what is that then my copy b 1box is unemployement compensation -paid family leave (UC-PFL) $0.00 i am curious and i don’t know if my EDD UNEMPLOYEMENT that’s the covid lickdown march 18,2020 i rember i apply for unemployement claim my company gave us form for our EDD UNEMPLOYEMENT because it’slockdown right i received paycheck and its 600 second i received my edd debit card and its 694 and i received my 1st stimulus is 1200 and 2nd stimulus 1700 then i compute and the total is $4,194 why it’s covid and i apply in edd for unemployement and the result is this or other issue of my tax.what if i want to dekete all my account and i’ll make new ithink i am victim here because my email and my account is spread already and my old # because i have my new # already i hope you can solved my problem and i dont know what to do thank you

Kay Bell

If you've not yet received a 1099-G form for the unemployment benefits you got last year, you need to call your state unemployment office and ask for an explanation of the delay and/or ask for it to be reissued.

Marikay Pigeon

How do I get my tax form 1099- G from unemployment?

Francis C. Waite

I have not received my form 1099 for 2020.

Frances Riley

What forms do you fill out if you only received a 1099-g form and the only income you received was from unemployment and there was no state or federal taxes taken out what forms do you use

Shera

Yes my federal income taxes on my 1099G form says 0.00 does that mean i didn't have taxes taken out while receiving unemployment?

John R Smith

I had a 1099G for unemployent and had to pay back 4 weeks of unemployment but they did not deduct it from 1099g. I have the credit card receipt to prove I paid it back do I just attach it to my 1099G or will there be a place on the tax form where this can be fillled in.

Kay Bell

It's hard to say, MoeMoenay, without knowing your full tax info. I would do another return including the unemployment and see what that shows. If you owe a lot, then you should send the amount due as soon as possible to avoid penalties and interest from adding up, since the IRS will catch it due to the copies of your unemployment that it got. Thanks for reading. Kay

MoeMoenay

I filed already before I got the tax form but I also didn’t have them withhold any money from my unemployment!! I didn’t receive any money until October or November though. So will I get a lot of taxes deducted from my return?

Donna Taylor

My MD unemployment 1099G only has 5 boxes. Why is it different than a typical one? When working on my returns, the boxes are not lining up.

Kay Bell

M, yes you should wait for your 1099-G to ensure that you report the correct amount of unemployment. The forms should be arriving by mail soon or be available online from your unemployment agency. Kay

Kay Bell

C.B., my first move would be to call the unemployment office and ask it about the discrepancy between the two versions of withholding on your benefits. Do you have any records of your payments that give you an idea of what you got and what was withheld at both the federal and state level? If so, have that handy for your call. Kay

M

Do I need a 1099 G Form if I did not have taxes taken out of Unemployment ?

C.B.

I received ui in 2020 and chose to have taxes withheld. On my 1099G form, it shows the federal income tax amount that was withheld, but it shows $0.00 for state income tax withheld (in box 11). But on my online account for unemployment, it gives me a dollar amount for my withheld state income tax.
What does this mean? Do I report 0.00 like my form says, or the dollar amount that my claim summary says online?
(Boxes 10a and 10b are blank on my form as well... not sure if they are supposed to be)
Thank you! Hope to hear back.

Sarah Green

I got my PUA 1099 but never received the monies on the paper nor received a card what should I do I got this letter out my mailbox today but no debit card or have I received the 11,520 I been calling about my funds and still haven’t received them

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