California’s Franchise Tax Board (FTB, the state income tax agency) just announced that taxpayers may have received an incorrect 2024 Form 1099-G. This form shows the refund amount for a prior year’s state income tax return. The following is the message from the FTB:
The Form 1099-Gs sent by FTB for tax year 2024 may contain incorrect amounts when an estimate transfer from the previous year has occurred. Taxpayers and tax professionals should verify that the amounts reported on the Form 1099-Gs are correct by comparing the amount shown on the 1099-G with the previous year’s tax return.
The FTB stated that they would be sending corrected 1099-Gs. The agency did not provide a date for this action. Taxpayers filing their 2024 tax returns should review their 1099-G carefully to compare the listed amount of the tax return with the actual refund received. If the actual refund is different, they should use the correct tax refund amount, not what is on the 1099-G. Tax refunds can (but are not necessarily) taxable income the following year for federal income tax if the taxpayer itemized in the previous year and deducted state income taxes (not sales tax) for which they received a tax benefit.