Should I Have Received a 1099-G?

Question

I received a refund from the state of Illinois last year on my income taxes. I have been expecting to receive a 1099-G due to that refund. I have not received the expected form.

After some googling, I found this site: http://tax.illinois.gov/individuals/1099-g.htm

Which states:

You should have received a 1099-G if you filed the federal U.S. 1040 and itemized your deductions on federal Schedule A last year. If you itemized and did not receive the 1099-G, click here to obtain the 1099-G information.

You will not receive a 1099-G if you did not file the federal U.S. 1040 and itemize your deduction on federal Schedule A last year.

I did file a 1040 last year, and I did itemize.

When I clicked through and logged in to the Illinois tax site, I saw no mention of a 1099-G for 2014 associated with my account.

Are there conditions under which I would not get a 1099-G even if I itemized?

Also, what does itemizing vs. claiming the standard deduction have to do with it? (This is more out of curiosity--I don't understand the connection).

Finally, assuming that this is an error, how would I go about asking the state to (re)issue the form?

Answer 1

When you itemize your deductions, you get to deduct all the state income tax that was taken out of your paycheck last year (not how much was owed, but how much was withheld). If you deducted this last year, then you need to add in any amount that you received in state income tax refunds last year to your taxes this year, to make up for the fact that you ended up deducting more state income tax than was really due to the state.

If you took the standard deduction last year instead of itemizing, then you didn't deduct your state income tax withholding last year and you don't need to claim your refund as income this year. Also, if you itemized, but chose to take the state sales tax deduction instead of the state income tax deduction, you also don't need to add in the refund as income.

For whatever reason, Illinois decided that you don't get a 1099-G. It might be that the amount of the refund was too small to warrant the paperwork. It might be that they screwed up. But if you deducted your state income tax withholding on last year's tax return, then you need to add the state tax refund you got last year on line 10 of this year's 1040, whether or not the state issued you a form or not.

Take a look at the Line 10 instructions starting on page 22 of the 1040 instructions to see if you have any unusual situations covered there that you didn't mention here. (For example, if you received a refund check for multiple years last year.) Then check your tax return from last year to verify that you deducted your state income tax withholding on Schedule A. If you did, then this year add the refund you got from the state to line 10 of this year's 1040.

Answer 2

If you don't itemize your deductions, your state tax refund is not considered income to you.

Even if you didn't receive the actual 1099-G, you know how much refund you got, so you can calculate if you need to add it back to your income this year using the worksheet on page 23 of the instructions.