If you have received income via unemployment benefits or from tax refunds issued by state or local governments you may receive a Form 1099-G. You will need to report this income when you prepare your taxes.

Benefits from Unemployment

You are required to pay taxes on any income earned from unemployment benefits. The amount you earned for the current tax year can be found in Box 1 of your 1099-G.

Refunds from Local and State Governments

On your 1099-G, Box 2 will show any income you earned via a refund, offset or credit from state or local taxes. Just because you have income report in Box 2 does not mean you will be required to report the amount on your federal tax return. If you took the standard deduction the previous year you can ignore Box 2. If you decided to itemize