by 
The Curious Bag
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Form 1099-G is an IRS form issued to individuals who have received a payment from a state government. It is used to file a tax return.
Significance
Any payment you receive from the government, specifically a tax refund, can be considered as income for some individuals. The 1099-G form is used to prove this on a tax return.
Features
The 1099-G form has several boxes. The most important are box 1 and 2. Box 1 shows the unemployment compensation you have received. Box 2 shows any tax refunds or credits paid to you.
Misconception
A tax refund can be reported as income in some instances. If your itemized deductions on a federal tax return include state income taxes, you may have to report a refund as income the year it is refunded.
Effect
The 1099-G form prevents individuals from reducing their state tax liability through a federal tax refund, by forcing the individual to claim the refund as income the following year.
Solution
File the 1099-G form with your federal tax return to comply with rules regarding reporting state income tax refunds.
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