An Oregon Form 1099-G reports money a state agency paid you during the year, and how you handle it on your taxes depends entirely on which box is filled in. Box 1 is unemployment compensation from the Oregon Employment Department, and it is fully taxable on your federal return and flows through to your Oregon return as part of federal adjusted gross income. Box 2 is a state tax refund or kicker credit from the Oregon Department of Revenue, and it is only federally taxable if you itemized deductions the year you overpaid. Oregon does not tax either one on the state return.
Which Box Was Filled In
The payer’s name at the top of your 1099-G tells you which agency sent it and which box matters.
If the form came from the Oregon Employment Department, look at Box 1 (unemployment compensation, including any federal supplements paid through the state), Box 4 (federal tax withheld from those payments), and Box 11 (Oregon tax withheld).1Internal Revenue Service. Instructions for Form 1099-G
If it came from the Oregon Department of Revenue, the relevant entry is Box 2, the state income tax refund, credit, or offset you received during the year.2Internal Revenue Service. Form 1099-G – Certain Government Payments The Oregon kicker, when one is paid, also shows up here.
Less common entries include taxable grants and agricultural payments. Agricultural payments in Box 7 go on Schedule F if you farm, not on Schedule 1.3Internal Revenue Service. About Form 1099-G, Certain Government Payments
Where to Find Your Form
Unemployment 1099-Gs are available through Frances Online, the Oregon Employment Department’s claimant portal at frances.oregon.gov, and the portal keeps prior-year forms on file.4Oregon Unemployment Insurance. 1099-G A Box 2 refund 1099-G comes from the Oregon Department of Revenue, either through its online services or on request. You do not attach the form itself to a paper return; you just carry the figures over to the right lines.
Reporting Box 1 Unemployment
All unemployment compensation is taxable federal income. The statute is direct: gross income includes unemployment compensation.5Office of the Law Revision Counsel. 26 USC 85 – Unemployment Compensation There is no partial exclusion or income phase-out for 2025.
On the federal return, put the full Box 1 amount on Schedule 1 (Form 1040), Line 7, which then feeds into your AGI on Form 1040, Line 11.6Internal Revenue Service. Schedule 1 (Form 1040) – Additional Income and Adjustments to Income Any federal tax withheld in Box 4 goes on Form 1040, Line 25b, exactly like paycheck withholding.
On the Oregon return, you do not enter unemployment separately. You start Form OR-40 with your federal AGI on Line 7, which already contains the unemployment amount.7Oregon Department of Revenue. 2025 Form OR-40 Oregon Individual Income Tax Return for Full-year Residents Oregon offers no subtraction for unemployment. If Box 11 shows Oregon tax was withheld, claim that on Form OR-40, Line 33. Attach a copy of the 1099-G if you’re paper-filing.
Getting Ahead of the Bill
Unemployment payments come without any tax withheld unless you ask for it, which is why a lot of recipients get an unwelcome balance due at filing time. You can file IRS Form W-4V with the Oregon Employment Department to have 10% of each payment withheld for federal tax. Ten percent is the only allowed rate; you cannot choose a different one.8Internal Revenue Service. Form W-4V, Voluntary Withholding Request To stop, file a new W-4V and check the opt-out box on Line 7.
If 10% will not cover your liability, quarterly estimated payments fill the gap. The IRS requires them when you expect to owe at least $1,000 after withholding and refundable credits, and your withholding and credits will fall short of 90% of the current year’s tax or 100% of last year’s.9Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals Use Form 1040-ES federally and Form OR-40-V for Oregon. Due dates are April 15, June 15, September 15, and January 15 of the following year.
Reporting a Box 2 State Refund
An Oregon state tax refund is not automatically taxable. Under the federal tax benefit rule, a recovered amount is income only to the extent the original deduction actually reduced your tax.10Office of the Law Revision Counsel. 26 USC 111 – Recovery of Tax Benefit Items In plain terms, your Box 2 refund is federally taxable only if you itemized on your prior-year federal return and deducted Oregon income taxes on Schedule A.
If you took the standard deduction that year, skip it entirely. There is nothing to report on Schedule 1, Line 1.
If you did itemize, only the portion of your itemized deductions that exceeded the standard deduction actually gave you a tax benefit. Say you filed single for 2024 with $15,200 in itemized deductions when the standard deduction was $14,600. Only $600 of extra benefit came from itemizing, so at most $600 of an Oregon refund would be taxable, and anything above that would not be. Report the taxable portion on Schedule 1 (Form 1040), Line 1.6Internal Revenue Service. Schedule 1 (Form 1040) – Additional Income and Adjustments to Income Oregon itself does not tax the refund on your OR-40.
The Oregon Kicker
Oregon’s surplus “kicker” credit gets returned to taxpayers when state revenue collections exceed the two-year forecast by more than 2%.11Oregon Department of Revenue. Fact Sheet – Oregons Surplus Revenue Kicker Credit You claim it on Form OR-40, Line 32.7Oregon Department of Revenue. 2025 Form OR-40 Oregon Individual Income Tax Return for Full-year Residents
The DOR treats the kicker the same as a regular state refund for federal purposes. If you itemized on your federal return for the year the kicker relates to, it will appear on a 1099-G the following year.12Oregon Department of Revenue. Oregon Surplus Kicker Run the same tax benefit comparison to figure out how much is federally taxable. If you took the standard deduction, none of it is.
If You Repaid Some of Your Unemployment
If the Employment Department decided you were overpaid and you paid it back, the treatment depends on when you repaid and how much.
- Repaid in the same year you received it: subtract the repayment from Box 1 and report only the net on Schedule 1, Line 7. Write “Repaid” and the dollar amount on the dotted line next to the entry.
- Repaid in a later year, $3,000 or less: no deduction is available, because miscellaneous itemized deductions were eliminated after 2017.
- Repaid in a later year, more than $3,000: you may claim a credit under IRC Section 1341, calculated by figuring your original-year tax with and without the income. Report it on Schedule 1, Line 7 with the notation “IRC 1341.” The math is tricky enough that tax software or a preparer is worth using.
If the Form Is Wrong
Contact the agency that issued it: Oregon Employment Department for a Box 1 error, Oregon Department of Revenue for a Box 2 error. If the agency confirms the mistake, it will issue a corrected form. Wait for the correction before filing. Filing with the wrong figure means amending later on Form 1040-X and Form OR-40-X, which delays any refund and creates extra work.13Internal Revenue Service. File an Amended Return
If You Never Filed for Unemployment
A 1099-G for benefits you never received usually means someone used your identity to file a fraudulent claim. Call the Oregon Employment Department at 503-947-1995 (toll-free 877-668-3204) or use the online contact form at unemployment.oregon.gov. If OED confirms fraud, it issues a corrected 1099-G zeroing out the benefits, and you do not report the amount on your return.14Oregon Unemployment Insurance. Protect Yourself from Fraud
Do not include the fraudulent amount on your return in the meantime. Flag your IRS account by filing Form 14039, Identity Theft Affidavit, preferably online at irs.gov/dmaf.15Internal Revenue Service. Form 14039, Identity Theft Affidavit If you already filed before spotting the fraud, you will need to amend once the corrected 1099-G arrives.
What Happens If You Leave It Off
The IRS and the Oregon Department of Revenue both receive copies of every 1099-G issued in your name, and the mismatch between what you reported and what they have is caught by automated systems, often within months of filing.
At the federal level, omitting 1099-G income is treated as negligence, which carries an accuracy-related penalty of 20% of the underpaid tax, plus the tax itself and interest running from the original due date.16Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments The IRS specifically names “not including income shown on an information return, like income reported on Form 1099” as an example of negligence.17Internal Revenue Service. Accuracy-Related Penalty Oregon adds its own penalties and interest on the state side. Report the figures accurately the first time, even if you plan to dispute them, and pursue the correction separately.