If you got unemployment benefits or an Arizona state tax refund last year, you’ll receive Form 1099-G — the Arizona 1099-G comes from the Department of Economic Security (DES) for unemployment compensation and from the Department of Revenue (ADOR) for state tax refunds. Both are available online by January 31, and you need the figures on them to file accurate federal and, in the case of unemployment, Arizona returns.1Internal Revenue Service. Requirements for Furnishing Form 1099-G Electronically The IRS already has a copy, so leaving the numbers off your return is the fastest way to earn a notice.
What the Arizona 1099-G Reports
Form 1099-G covers certain government payments. Three boxes matter for most Arizona filers:
- Box 1 shows the total unemployment benefits DES paid you during the calendar year, including any federally funded extensions, as a single figure.2Internal Revenue Service. Form 1099-G – Certain Government Payments
- Box 2 shows refunds, credits, or offsets of state income tax issued by ADOR. The form is only issued when the refund was $10 or more.3Internal Revenue Service. Instructions for Form 1099-G
- Box 4 shows any federal income tax withheld from your unemployment benefits, which you claim as a credit on your federal return.
The form can also report taxable grants in Box 6 and Department of Agriculture payments in Box 7, though those are uncommon for individual filers.4Internal Revenue Service. About Form 1099-G, Certain Government Payments
Getting Your Unemployment 1099-G From DES
DES posts your 1099-G electronically in its CACTUS portal at uibenefits.az.gov. Log in, and the form appears under Unemployment Services and in your message center.5Arizona Department of Economic Security. 1099-G Tax Forms Even if you requested a paper copy by mail, the electronic version is still available through CACTUS.
If you moved during the year and want a paper copy to reach you, update your mailing address in CACTUS before the end of December. A misdirected form doesn’t excuse you from reporting the income. Claimants who can’t get into their CACTUS account will need to go through DES’s identity verification process to regain access.
Getting Your State Refund 1099-G From ADOR
ADOR provides an online lookup at form1099g.aztaxes.gov, where you can view your 1099-G on or before January 31.6State of Arizona Department of Revenue. View 1099 Form – AZTaxes.gov7State of Arizona Department of Revenue. View My 1099-G
Not every refund recipient gets one. ADOR issues a 1099-G for a state refund only if you itemized deductions on your prior-year federal return. If you took the standard deduction, the refund isn’t taxable income to you and no form is generated.8Internal Revenue Service. 1099 Information Returns (All Other) If you itemized and still don’t see a form online, contact ADOR to confirm whether one was issued.
Reporting Unemployment Benefits on Your Federal Return
Unemployment compensation is fully taxable at the federal level. Report the Box 1 amount on Line 7 of Schedule 1 (Form 1040).9Internal Revenue Service. Topic No. 418, Unemployment Compensation The Schedule 1 total flows into your adjusted gross income and is taxed at your ordinary rate; there’s no special lower rate for benefits.
If DES withheld federal taxes, the Box 4 amount goes on Line 25b of Form 1040.10Internal Revenue Service. 2025 Instructions for Form 1040 That reduces your tax owed dollar-for-dollar. Don’t overlook it.
When the Box 2 Refund Is Taxable Federally
A state tax refund is taxable at the federal level only if you got a tax benefit from deducting state taxes in the prior year. This is the tax benefit rule, codified at 26 U.S.C. § 111.11Office of the Law Revision Counsel. 26 USC 111 – Recovery of Tax Benefit Items If you deducted state income taxes on Schedule A and later got some of them back, the refund effectively reverses part of that deduction.
If you claimed the standard deduction on your prior-year federal return, your state refund is not taxable. You never received a federal benefit from the state taxes you paid, so there’s nothing to recapture.8Internal Revenue Service. 1099 Information Returns (All Other)
If you itemized, the refund may be partially or fully taxable depending on how much benefit you actually received. If your itemized deductions barely exceeded the standard deduction, only the amount above that threshold is taxable, not the entire refund. Use the State and Local Income Tax Refund Worksheet in the Schedule 1 instructions, or Worksheet 2 in IRS Publication 525, to calculate the exact taxable portion.12Internal Revenue Service. Publication 525 (2025), Taxable and Nontaxable Income Any taxable amount goes on Schedule 1. If the prior year involved the Alternative Minimum Tax, the calculation gets more complicated, and Publication 525 or a tax professional is the right stop.
Reporting on Your Arizona Return
Arizona starts with your federal adjusted gross income, then applies state additions and subtractions. All income is taxed at a flat 2.5%.13Arizona Department of Revenue. Individual Income Tax Highlights
A common mistake: assuming Arizona exempts unemployment benefits. It does not. Arizona Revised Statutes § 43-1022 lists the allowed subtractions from Arizona gross income, and general unemployment benefits are not among them. Social Security benefits and certain railroad retirement and railroad unemployment payments qualify, but regular DES unemployment compensation is taxable in Arizona at the same 2.5% flat rate as your other income. Don’t subtract it on Arizona Form 140 (or 140PY for part-year residents), or you’ll understate your tax and can be assessed penalties.
State tax refunds reported in Box 2 are generally not taxable on your Arizona return. Arizona doesn’t allow a deduction for state income taxes paid on its own return, so there’s no prior benefit to recapture.
Arizona’s standard deduction for 2025 is $15,750 for single filers and $31,500 for married couples filing jointly.13Arizona Department of Revenue. Individual Income Tax Highlights If your total income including unemployment falls below the standard deduction, you may owe no Arizona tax even though the benefits are technically taxable.
Fixing an Incorrect 1099-G
If the amount on your 1099-G doesn’t match what you actually received, you need a corrected form from the agency that issued it. You can’t file with different numbers and hope the IRS doesn’t compare.
For unemployment errors, contact DES with bank statements or payment records showing the actual deposits. DES will review the documentation and, if the error is confirmed, issue a corrected 1099-G. The review can take several weeks, so start early. If you can’t get the correction before April, file an extension while the review is pending.
For Box 2 errors, contact ADOR’s Taxpayer Assistance Unit. ADOR will verify the figures against your prior-year return and internal payment records before issuing a corrected form.
If You Got a 1099-G for Benefits You Never Received
A 1099-G for unemployment benefits you never applied for typically means someone filed a fraudulent claim using your identity. This has been a widespread problem since 2020, and it won’t resolve itself.
Report the fraud to DES using its online fraud referral form. Include your Social Security number, full name as it appears on the documents, and the mailing address where you received them.14Arizona Department of Economic Security. Unemployment Insurance Benefit Fraud DES also recommends filing reports with the Federal Trade Commission at identitytheft.gov and the National Center for Disaster Fraud. If you received a debit card you didn’t request, destroy it; DES doesn’t need it returned.
On the federal side, complete IRS Form 14039 (Identity Theft Affidavit) and attach it to the back of a paper-filed return. Don’t include the fraudulent income, but do file the 14039 so the IRS knows to disregard the phantom 1099-G.15Internal Revenue Service. How IRS ID Theft Victim Assistance Works You’ll need to paper-file rather than e-file in this situation. Request a corrected 1099-G from DES showing zero benefits paid, and keep every piece of correspondence documenting the fraud.