The Department of Revenue recently mailed Form 1099-G to taxpayers. We often receive questions about how to read this form when it involves a taxpayer who filed as married filing separately on the same form in the previous tax year.
When married taxpayers file separately on the same form and one spouse is entitled to a refund and the other spouse owes, the refund of one spouse is applied to the amount owed by the other spouse. The refund received is therefore different from what is shown on the return. When the taxpayer receives their Form 1099-G the following year, it will show the amount of the refund as calculated on the return and not necessarily the amount the taxpayer received.
The amount shown on Form 1099-G, and not the amount of refund actually received by the taxpayer, should be reported on the current year return and used in any calculations, if applicable.
Read more from the IRS.gov.