Form 1099-G vs 1099-MISC

If you’re issuing information returns, whether you’re with a government agency or a private business, you’re probably dealing with 1099 forms. But knowing which one to use—and when, isn’t always obvious especially when it’s between two 1099 forms, like Form 1099-G vs 1099-MISC. If someone receives government payments (like a grant or refund), they might mistakenly file a 1099-MISC instead of a 1099-G. Well, form 1099-G and 1099-MISC are not interchangeable. They serve different purposes, are filed by different types of payers, and go to recipients for different reasons. Misusing or filing the incorrect form even by mistake leads to incorrect reporting errors, IRS penalties, rejections, and trigger IRS mismatch notices or audit. So, let’s break this Form 1099-G vs 1099-MISC down clearly.

Why These Two Different Forms Exist

Form 1099-G – Government Use Only

Form 1099-G is only for government agencies: federal, state, or local. It’s used to report money that agencies pay to individuals, like:

• Unemployment compensation (Box 1)
• State or local income tax refunds (Box 2)
• Re-employment and trade adjustment assistance
• Taxable grants (Box 6)

If a government agency pays out a state grant to a business or individual and it’s taxable, it goes in Box 6 of 1099-G, not on a 1099-MISC. That’s a common error that causes rejections.

Form 1099-MISC – Business & Miscellaneous Income

Form 1099-MISC is for businesses (or anyone acting in a trade or business) to report miscellaneous income paid to nonemployees. It includes:

• Rent payments (Box 1)
• Royalties (Box 2)
• Prizes and awards (Box 3)
• Medical or legal service payments (Box 10)
• Other miscellaneous payments (various boxes)

For 2025 TY: If you pay $600 or more for rent to a landlord, for example, and you’re doing it in the course of business not personally you need to issue a 1099-MISC.

• Increased Reporting Threshold: Starting in 2026, the threshold for reporting income on Form 1099-MISC (and Form 1099-NEC) will increase from $600 to $2,000.
• Inflation Adjustment: Beginning in 2027, this $2,000 threshold will be adjusted annually for inflation.
• Backup Withholding Alignment: The requirement for backup withholding will also align with the new $2,000 threshold, adjusted for inflation starting in 2027.

Dollar Thresholds & Box-by-Box Overview of Form 1099-MISC

Form	Box	Threshold	When Payer Must File	IRS Cross-Check Target
1099-MISC	Box 1 (Rent)	≥ $600	Businesses paying rent	Schedule E
1099-MISC	Box 2 (Royalties)	≥ $10	Royalty payments from publishers etc.	Often missed
1099-MISC	Box 3 (Other income)	≥ $600	Prizes, awards, settlements	Included in gross income
1099-MISC	Box 10 (Medical/legal)	≥ $600	Service providers like attorneys	Schedule C

Yes, royalty threshold is just $10. And yes, people forget it all the time. That’s a problem.

Deadlines & Weekend Rules for TY 2025 (Files Sent in 2026)

For Tax Year 2025 (returns issued in 2026), deadlines matter. Missing one counts as late, even if you upload one day late.

	Due Date (2025 TY)	Weekend/Holiday Adjustment
Furnish recipient statements (Copy B)	February 2, 2026	Jan 31 falls on a weekend → shifts to next business day, Feb 2, 2026
Paper file to IRS	February 28, 2026	No weekend shift mentioned — standard deadline February 28
E-file to IRS	March 31, 2026	No weekend shift; follows printed deadline

Checklist

Recipient Copy Due: January 31, 2026

Paper Filing with IRS: February 28, 2026

Electronic Filing Deadline: March 31, 2026

Here’s what messes people up: If January 31 or February 28 falls on a weekend, the due date rolls to the next business day. In 2026, Feb 2 is the first Monday after the weekend, and that’s the IRS receipt deadline. If you upload or postmark it after Feb 2, 2026 you’re late.

Backup Withholding & Correction

B-Notice Timeline

If you file with an incorrect TIN and the IRS can’t match it, you’ll get a CP2100 notice. You then have 15 business days to send the first “B-Notice” to the payee asking them to correct their TIN.

If they don’t reply or the problem isn’t fixed, then you must begin 24% backup withholding on any future payments. It’s not optional. It’s required.

Fixing Errors

If you submitted the wrong form type, recipient name, TIN, or amount:

• Issue a Corrected 1099, check the “CORRECTED” box
• Don’t just resend the original
• Fix the data in your system so it doesn’t happen again next year

Errors don’t just trigger penalties they cause confusion for recipients and rejections from state agencies if you’re in the Combined Federal/State filing program.

Penalties for Late 1099 Forms or Incorrect Filings

When Filed	Penalty per Form	Max (Small Biz)
30 days or less	$60	$220,500
31 days – Aug 1	$120	$630,500
After August 1	$310	$1,261,000
Intentional Disregard	$630+	No max

If you file 500 returns and miss the March 31 electronic deadline, that’s potentially $155,000 in penalties if you’re past August 1.

State Reporting & CF/SF

The IRS’s Combined Federal/State Filing Program (CF/SF) lets you send one file to the IRS, and they forward it to participating states. Great in theory. But here’s the catch: if you don’t fill out the “K” records correctly especially the state codes your return can get rejected by the state, even if the IRS accepts it.

Some states don’t participate at all. In those cases, you must send the forms directly to that state. With their format. Their portal. Their rules.

Filing Methods: IRIS vs. Paid Online Portals

You now have two main options for submitting 1099s electronically:

IRIS (Information Returns Intake System)

• Free IRS platform
• Doesn’t require TCC
• Built to replace FIRE
• Accepts Forms 1099-G and 1099-MISC

Paid Portals (likeTax1099)

• Handle TIN matching
• Offer recipient copy mailing or e-delivery
• Auto-generate corrected forms
• Allow bulk import and dashboard tracking
• Easy to use UI

IRIS is useful, but paid options like Tax1099 offer more automation and audit trails, especially for high-volume filers or agencies filing in bulk.

Common Mistakes & How to Avoid Them

Mistake	Fix
Reporting a state grant on 1099-MISC instead of 1099-G Box 6	Use 1099-G for all state grants
Skipping 1099-MISC for royalties over $10	File if it’s $10 or more—yes, even if only $11
Ignoring weekend rules, assuming IRS will overlook late uploads	File before Feb 2, 2026
Leaving out state codes in “K” records during CF/SF filing	Double-check and map all state codes
Submitting without validating TINs	Use IRS TIN Matching before sending

Pre-Filing Checklist

• Confirm the correct form type
• Double-check payment threshold
• Validate TINs
• Plan to file before Jan 31
• Save all confirmation receipts

Real Life Scenarios

1. State revenue department issues $9 refund → No Form 1099G vs 1099MISC needed. Refund under the 1099G reporting rules (must report $10 or more).
2. Economic development agency awards $750 pandemic relief grant → Government payment, so must file Form 1099G Box 6; plus, check for backup withholding rate 24 % if TIN missing.
3. Retail company pays $2,500 rent to an individual landlord → Business payment, so file Form 1099MISC Box 1 (rent ≥ $600).
4. Publishing house pays $150 royalty to an author → Must file Form 1099MISC Box 2 once royalties hit 1099MISC threshold $600? Actually no—royalties report at $10+, so this is required.
5. USDA disburses $425 subsidy to a farmer → Government payment: file Form 1099G Box 7 (agricultural subsidy).

FAQs

Q1. Must our agency issue a 1099G for every unemployment compensation payment?

Yes—issue a Form 1099G when total benefits to a recipient reach $10 or more for the year.

Q2. Can the same payment ever require both 1099G and 1099MISC?

No. You choose based on payer type and payment purpose—government vs business. Don’t double report.

Q3. At what amount must we file 1099MISC for royalties?

File once total royalties hit $10 in a calendar year—that’s the 1099MISC threshold $600 rule exception for royalties.

Q4. Do we issue 1099G for state tax refunds even if some recipients won’t owe tax on them?

Yes—report any refund of $10 or more. Recipient’s taxability (such as itemization) is separate.

Q5. Can we upload 1099G and 1099MISC records together through IRIS?

Yes—IRIS supports mixed form batches as long as each row follows the correct template. You also have the option to file 1099 online for free via IRIS.

Q6. What penalties apply if we miss the February 2 recipient deadline?

Penalties kick in at $60 per late form, rising through tiers to $660 (or more) for intentional disregard.

Conclusion

Form 1099-G vs 1099-MISC have specific use cases, thresholds, and deadlines. Getting them wrong isn’t just annoying it’s expensive. Know who should file what, when, and how. Fix your errors. Don’t assume IRS grace.

Want help filing these forms in bulk, with bulk TIN matching, schedule eFiling, and integrations with multiple accounting platforms? That’s what Tax1099 is built for.