Did you receive a 1099-G?

The 1099-G is not a bill.

What is Form 1099-G?

Form 1099-G provides important tax information that must be reported on your federal income tax return. Form 1099-G reports the amount of refunds, credits, and offsets of state income tax during the previous year. This amount may be taxable on your federal income tax return if you claimed your state income tax paid as an itemized deduction on your federal income tax return last year.

What should I do with my Form 1099-G amount? Do I need to pay the amount shown?

The amount on Form 1099-G is a report of income you received from the Mississippi Department of Revenue.

It is not a bill, and you should not send any type of payment in response to the form. 

If a professional preparer handles your taxes, you should give this form to the preparer, along with your other tax information, such as W-2 form(s). If you prepare your own taxes, you should review the federal return instructions for reporting state income tax refunds, or visit the Internal Revenue Service's web site at www.irs.gov​ for more information.

Why would I have to report my refund as income?

In computing itemized deductions on your federal tax return, you are allowed to deduct state income taxes paid during the year. Most people deduct the amount of Mississippi income tax withheld, as shown on the W-2 form, plus any Mississippi estimated tax payments they made during the year. Since this deduction reduces federal taxable income, if any part of the state tax deducted on the federal return is later refunded, that amount has to be reported as taxable income for the year in which the refund is issued.

Example: A taxpayer deducted $5,000 in state income tax on his 2022 federal return, based on the Mississippi withholding amount from his W-2. When he filed his 2022 Mississippi return, he found he was entitled to a refund of $1,000, which was issued on April 1, 2023. This means that he only paid $4,000 in state income taxes for 2022, not the $5,000 he claimed. Therefore, the taxpayer will be required to report the difference of $1,000 (the amount of his refund) on his federal return for 2023.

I claimed a refund, but the money was applied to a bill for another year. Do I still have to report this as income on my federal tax return?

Mississippi law requires refunds or credits to be applied to any outstanding bills. You had a refund or credit. Even though you didn't actually receive a check, you received the benefit of the refund or credit, and you are subject to the same federal reporting requirements as if you had received a refund check or credit.


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