What is Form 1099-G?
State agencies send a 1099-G when they pay unemployment compensation or issue a state/local tax refund. Unemployment is fully taxable as income. State tax refunds may be taxable if you itemized deductions in the prior year and received a tax benefit from the state tax deduction.
SupportedKey Boxes
| Box | Description | Where it flows |
|---|---|---|
| Box 1 | Unemployment compensation | Schedule 1 Line 7 → Form 1040 Line 8 |
| Box 2 | State/local income tax refunds | Taxability depends on prior-year deduction (deferred) |
| Box 4 | Federal income tax withheld | Form 1040 Line 25b |
How PaisaTax Handles It
- Upload or manual add — one slot per state agency
- Unemployment income (Box 1) flows directly to Schedule 1 Line 7 as fully taxable income
- State tax refund taxability (Box 2) — determining whether a prior-year refund is taxable requires the tax benefit rule. This is currently deferred in PaisaTax.
Common Situations
- Unemployment benefits: Fully taxable at federal level. Enter Box 1 and it flows to Schedule 1 automatically.
- State tax refund (Box 2): Only taxable if you itemized on the prior-year return and deducted state taxes. If you took the standard deduction last year, the refund is not taxable.
- Withholding (Box 4): Many states offer optional withholding on unemployment. It flows to Form 1040 Line 25b.