1099-G Repayments Explained For taxpayers who have received unemployment benefits, realizing that the previous year overpaid or his/her benefit was denied can result in complicated repayment arrangements as shown on Form 1099-G. Our analysis of what this kind of repay entails and how it should be reported.
Overview of Form 1099-G
Form 1099-G reports unemployment compensation received for the tax year and is issued by government entities. It includes the total benefits and any federal taxes withheld paid, as well as adjustments made for repayments of overpayments. The benefits recorded on the form are taxable income, so taxpayers need to send this information along with their tax returns as well13.
Repayment Scenarios
Overpayment Situations:
A taxpayer can not receive more unemployment benefits than they are supposed to be entitled and will have to re-pay any excess amount received. You will have to declare this repayment on your tax return.
The total benefits we report on Form 1099-G will include all amounts you were paid during the tax year, regardless of whether they were later determined to be overpayments.unemployment benefits (ad) Adjustment of Figure by Taxpayers: The total is then capable of being adjusted through the subtraction in that year24 for payments during the same calendar-year.
Reporting Repayments:
If taxpayers have to pay back unemployment benefits, the amount should be reported correctly on their tax return. This may lower their taxable income for the year.
They are logged as cash repayments in the “Benefits Repaid” section of this form, while offsets (essentially future benefits that will be withheld to cover an overpayment)37 do not count towards a repayment35.
Tax Consequence of Repayments
This means that if you payback any unemployment benefits it may be able to be deducted from your income depending on the circumstances reducing your associated tax liabilities. Nevertheless, you should keep receipts (or cancelled checks) to support these deductions when tax time rolls around.
So in short, it is important to know how you should report repayments on Form 1099-G due accurate filing of tax returns and for compliance. For individualized advice based on a taxpayer’s specific circumstances, he or she should consult with IRS guidelines or his/her own tax preparer.
