I got a refund from my state for money I didn't owe from a previous year and received interest on that money while they had it. I got one of those forms that says "this form takes the place of federal forms 1099-G and 1099-INT". How do I report the interest money on my taxes as interest income?
Report the interest as a 1099-INT, the same as a 1099-INT from a bank. In the Search box type 1099-int, then click the link that says "Jump to 1099-int."
When I try to add the interest as a 1099-INT the first thing it wants is who/where the interest came from, no option for my department of taxation.
When it asks how you want to enter your 1099-INT, select "I'll type it in myself." If you are on a page that says "Search for Your Financial Institution," it's trying to import the 1099-INT, which you can't do. At the bottom of that page click the button that says "Skip Search." Once you get to the screen for entering the 1099-INT you can type the department name in the "Received from" box and enter the amount.
Once I click on "I'll type it in myself." I see where I can type in the department, but then do I put my interest amount in box 1? On my form the interest amount is in box 2.
Are you sure you're looking at the interest and not the tax refund? On a standard IRS Form 1099-G a state income tax refund would be in box 2. But your Department of Taxation might be doing something nonstandard on their combined 1099-G and 1099-INT. Maybe they made up their own form and didn't follow IRS rules. In any case, enter the interest income in box 1 of the 1099-INT, even if you have a nonstandard form that uses a different box number.
It’s a very basic form.
Box 1 - Income Tax Refunds, Credits, or Offsets
Box 2 - Interest Paid on Tax Refund
Box 3 - Tax Year
Sure enough, Virginia made up their own nonstandard form.
The refund in box 1 goes in box 2 of Form 1099-G.
The interest in box 2 goes in box 1 of Form 1099-INT.
The year in box 3 goes in box 3 of Form 1099-G.