Delayed Form 1099-G January 2021 Tax News
There are certain circumstances where a timely filed tax return requires additional review and validation. When this occurs, the return may be held past the year in which it was filed. For example if a 2019 tax return is filed on October 15, 2020 and processing is delayed, we may not issue a refund until 2021.
When a refund is issued in a year after the filing year, a Form 1099-G will be issued for that year in which the refund is actually issued. Take note that taxpayers must then report the refund in the year it was actually received - not the year the tax return was filed resulting in the overpayment. In the example provided, the refund should be reported in 2021, rather than 2020, and special attention may need to be paid as to how you or your clients report the income.
If you or your clients use tax preparation software, the Form 1099-G amount may be automatically erroneously populated for the year the tax return was filed. If this happens, the Form 1099-G information should be reviewed and updated to show the year the refund was actually issued. If using a tax preparer, taxpayers should notify their preparers of the year the refund was issued to ensure that the Form 1099-G information is accurate on the return.
If the Form 1099-G is not available when it is time to prepare the return, there are some resources available that can be used to verify the correct tax year and amount of the refund. They are in MyFTB, Secure Chat accessed within MyFTB, and/or the Tax Practitioner Hotline.