![]() If you itemize your deductions on Schedule A instead of taking the standard deduction, the IRS allows you to deduct the state income taxes you paid. Suppose your state requires your employer to withhold state income taxes from your salary and wages. Box 3 of the form will indicate the relevant tax year. You only need to report it as federal income if you took a federal deduction for paying those taxes in a prior year and that deduction actually reduced your federal taxes. However, you don't necessarily have to report this amount on your federal tax return or pay additional federal taxes. ![]() When you receive a refund, offset, or credit of state or local income tax, that amount appears in box 2 of the 1099-G form. It is not necessary to attach the 1099-G to your tax return.Schedule 1 for Form 1040 includes a separate line for unemployment compensation in the income section.Box 1 of the 1099-G Form shows your total unemployment compensation payments for the year.Generally, you must include in federal taxable income any unemployment compensation from a state government. state or local income tax refunds you received that year.The most common uses of the 1099-G is to report: If you received a 1099-G Form this year from a government agency, you may need to report some of the information it contains on your tax return. The additional boxes on the form may show amounts you received from other government agencies, including taxable grants or payments from the Department of Agriculture.Box 2 of Form 1099-G shows the state or local income tax refunds, offsets, or credits you received, but these amounts typically only need to be reported if you took a federal deduction for paying those taxes in a prior year and that deduction actually reduced your federal taxes.Box 1 of the 1099-G Form shows your total unemployment compensation payments for the year, which generally need to be reported as taxable income on Form 1040. ![]() Form 1099-G is issued by a government agency to inform you of funds you have received that you may need to report on your federal income tax return.
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