[Revenews] 1099-G Question and Answers

[BALL Shannon * DOR]

1099-G Question and Answers



The Department of Revenue has received a number of questions regarding the 1099-Gs we mailed in January. We have compiled them here along with our answers and some general information.  A copy of this email, including images that go along with the examples, is attached.  After further research, some of these answers are different than what we previously stated in emails to individual practitioners and what we had written in previous Revenews. We apologize for any confusion this has caused.



1099-Gs are sent to taxpayers that received refunds, credits, or offsets of $10 or more of personal income, Tri-met Transit Self-Employment, or Lane Transit Self-Employment tax during the prior year who also itemized deductions. The IRS provides the Department of Revenue with a list of taxpayers that did not itemize deductions and are not required to receive a 1099-G.



Q1. I did not itemize my deductions on my 2015 federal return. Will I receive a 1099-G?

A1. No. If you did not itemize your deductions on your 2015 federal return, you will not receive a 1099-G.



Q2. I received a 1099-G showing a refund of 2015 tax, but I owed tax on my 2015 return. Is this correct?

A2. Yes; taxpayers that claimed a surplus refund (kicker) credit on their 2015 return will receive a Form 1099-G for the kicker amount, even if they owed tax. Even though you did not receive a refund, the kicker was credited to the amount of tax that you owed.



Q3. My software and 1099-G form are showing different amounts as the refund for state income tax for 2015. Which is correct?

A3. The 1099-G form is correct. We have received reports of software products that are calculating a different amount than what is on the 1099-G you received. You may need to override your software to enter the correct amount from the 1099-G form. We are reaching out to the software companies at the same time that we are sending out this Revenews to provide them with this information.



Q4. My 1099-G form shows a 2015 refund that is higher than what I actually received. Is this correct?

A4. This can happen in a few different situations. For example, Gary received a 2015 refund of $300 and had a kicker credit of $500 on his 2015 return. Gary will receive a 1099-G for showing a 2015 refund of $500, the amount of his kicker credit and the amount of tax benefit he received. This situation also occurs if a refund is partially or wholly offset to Interest on Underpayment of Estimated tax (UND), other debt, charitable checkoff (including any kicker donated to the state school fund) or applied as an estimated tax payment to the next tax year.



Q5. What if my refund exceeds the kicker credit?

A5. You will receive a 1099-G form showing both the kicker credit and additional refund not attributable to the kicker. For example, Don received a 2015 refund of $600 including his kicker credit of $500. Don will receive a 1099-G form showing a 2015 refund of $600 ($500 for the kicker credit plus $100 additional refund).



Q6. Why is my kicker included as a 2015 refund on the 1099-G form when it was calculated using 2014 tax figures? Which tax year's federal Schedule A should I use to determine if my refund/kicker credit was taxable?

A6. While the amount of the kicker is based on the 2014 tax liability, the dollars themselves come from 2015 tax revenue and aren't available unless and until a 2015 tax return is filed. You should use your 2015 federal Schedule A to determine the taxability of your refund/kicker credit.



You can find the State and Local Income Tax Refund Worksheet in the Form 1040 instructions here (page 24): https://www.irs.gov/pub/irs-pdf/i1040gi.pdf



Example 1: Fred received a 1099-G showing a $2,500 refund. This refund consisted of his total withholding of $2,000 and his $500 kicker credit. Fred fills out his State and Local Income Tax Refund Worksheet as follows (picture of example can also be found in the attachment):



[cid:image005.jpg at 01D28923.8BD61710]

Fred's taxable refund is $2,000, the amount that he deducted on his 2015 Schedule A. Since his kicker wasn't used to pay any of his tax, Fred won't claim it as a deduction on his 2016 Schedule A.



Example 2: Greta and Hildy received a 1099-G showing a $1,000 refund. On their 2015 return they had $13,000 in itemized deductions, tax after non-refundable credits of $3,000, withholding of $2,500 (deducted on their schedule A), and a $1,000 kicker credit which nets out to a $500 refund. Greta and Hildy fill out their State and Local Income Tax Refund Worksheet as follows (picture of example can also be found in the attachment):



[cid:image006.jpg at 01D28923.8BD61710]



Greta and Hildy's taxable refund is $400. They can also deduct their $1,000 kicker as state income taxes paid on their 2016 Schedule A.



Q7. If the kicker credit was used to pay the tax due on my return, in part or completely, can I claim that amount as state income taxes paid on my 2016 federal Schedule A?

A7. Yes; to the extent the kicker is used as a credit against tax due on the Oregon return, it can be claimed as a 2016 Schedule A deduction of state income taxes paid. For instance, Tami claimed a kicker credit of $500 on her 2015 tax return but still had tax due after applying the credit. On her 2016 federal return, Tami will deduct the $500 kicker credit as state taxes paid on her federal Schedule A. If Tami had claimed a kicker credit of $500 and then received a $300 refund (assuming no other payments), she would claim the difference ($200) as a deduction on her 2016 federal Schedule A.



Q8. I donated my kicker to the State School Fund and received a 1099-G form that included my kicker. Can I claim my donation on federal Schedule A as a charitable contribution?

A8. Yes; the State School Fund is an eligible donee because it is a part of a governmental unit. Here's the IRS' webpage that describes Other Eligible Donees: https://www.irs.gov/charities-non-profits/contributors/other-eligible-donees

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