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February’s tax tip of the month is all about those pesky 1099-G tax letters you might have received in the mail. If you’ve received this letter from the Nebraska Department of Revenue (or the state tax department where you live), you’re not alone. This tip should help explain what it is and what you should do with it.

Why did I receive this letter?

You likely received this letter because you received a state income tax refund last year.

What should I do with it?

Keep this letter with your other tax documents and bring it with you to your tax appointment. If you have worked with us, you should also know that our office is already tracking this information for you.

Why does the letter say I’m going to pay a penalty?

We really have no idea. You’re not going to pay a penalty, receive a fine, or go to jail. (Not for receiving this reason, anyway!)

If you itemized your federal tax deductions last year, using the state income tax method, you will claim last year’s tax refund as income on your tax return this year. This is normal and expected. As always, don’t hesitate to reach out to the tax experts at Gabriel, Burger & Else, CPA, PC with your tax questions!