If you own or operate a business in the U.S., you are already familiar with income tax forms. When the tax season approaches, it's time to prepare the papers, fill in several forms, and submit information returns to the Internal Revenue Service (IRS).
If your company hires independent contractors, you're likely familiar with IRS forms 1099-Misc and 1099-NEC that report nonemployee compensation. But you may not know much about IRS Form 1096.
So, what is Form 1096 used for? And who needs to file it? Keep reading to learn what Form 1096 is and other questions.
IRS Form 1096 Key Information
Here are the essentials to know about Form 1096.
- IRS Form 1096 is a summary form for other information returns, including forms 1097, 1098, 1099, 3921, 3922, 5498, or W-2G.
- The form is only used when information returns are filed by mail.
- A separate 1096 form is required for each type of return filed.
- Form 1096 is only used when filing 250 or fewer information returns. Any amount above that should be submitted electronically, and a 1096 form is not required.
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What Is IRS Form 1096?
Also formally referred to as the "Annual Summary and Transmittal of US Information Returns," IRS Form 1096 is a summary document that accompanies other IRS information return forms such as forms:
- W-2 G
Form 1096 accompanies these information returns documents only when filed by mail. In cases where they are filed electronically, Form 1096 is not needed.
What Is the Purpose of the 1096 Form?
IRS Form 1096 essentially acts like a fax cover sheet. It is sent with your completed return forms to inform the IRS precisely what you’re submitting. It helps to expedite the tax return process as IRS officials can use it to understand your return information quickly.
Remember that you need to file a separate 1096 for each type of return prepared. For example, if you prepare and submit 15 1099-MISC forms and two 1099-NEC forms, you must prepare two distinct 1096 forms to send to the IRS.
Who Needs to File IRS Form 1096?
Business owners who utilize the services of nonemployees, such as independent contractors or freelancers, typically need to file forms 1099-MISC and 1099-NEC. In addition to these forms, business owners must file separate 1096 forms.
Overall, any individual or business owner that files any of the forms below must also file form 1096:
Form 1097: This form is used by recipients and issuers of certain tax credit bonds, including partnerships and mutual funds, to report how their tax credits are distributed.
Form 1098: This form is used to report mortgage interest for amounts totaling 600 or more that you’ve received during the year while in your trade or business.
Form 1099: This refers to a series of documents that report different types of compensation, including dividends, royalties, rent, and contractor payments. There are about twenty different versions of Form 1099, and each needs to be filed together with a 1096 form.
Form 3921: This form is filed by corporations to report each stock transfer to an individual following their exercise of an incentive stock option.
Form 3922: This form is completed by corporations. It's used to report the transfer of the legal title of a stock share acquired by an employee in accordance with their exercise of an option accorded by an employee stock purchase plan.
Form 5498: This form is filed by an issuer or trustee of an Individual Retirement Account (IRA) for each person they have maintained an account.
Form W-2 G: This is used to report gambling winnings plus any federal income tax withheld on the winnings.
The IRS requires you to do it electronically if you have 250 or more payment returns to file. In that case, you don’t have to complete Form 1096. You can file electronically or mail the paperwork for anything less than 250.
Where To Get a Copy of IRS Form 1096?
The IRS wants the 1096 forms to be scannable. Photocopies are not accepted. Downloading a 1096 form from the IRS website or any other site is also not an option. Submitting a 1096 form could result in a penalty.
You can order a scannable version of Form 1096 from the IRS. Visit IRS and enter the number of copies you need. Once completed, you should receive the forms within ten business days.
You can also request the forms by calling 1-800-tax-form (800-829-3676) from Monday to Friday during regular business hours. Ensure you have your name, address details, and contact information ready when you call.
Where To Mail IRS Form 1096?
Now that you know where you can get a copy of IRS Form 1096, your next question might be, “Where do I mail it?” Unfortunately, everyone cannot use a specific mailing address when filing this form. The address is different across different states.
To determine where to mail your 1096 form, visit IRS’s Where to File Form 1096 page. You'll find the addresses used by different states. You can also find the addresses on page three (page two of instructions) of Form 1096.
When Is Form 1096 Due?
Generally, the due date for filing Form 1096 with accompanying information returns is February 28, the year following the tax year. For example, if you're filing returns for the tax year 2021, Form 1096 due date is February 28, 2022.
Information returns may need to be filed as early as January 31 or May 31. If you're filing Form 1096 with Form 1099-NEC, the due date is January 31. If you're filing Form 1096 with Form 5498, the due date is May 31. For a complete list of deadlines for all types of information returns, check out IRS’s 2022 General Instructions for Certain Information Returns (PDF) starting on page 26.
Failure to file your information returns within the due dates exposes you to penalties. Here’s how the penalties work:
- Filing within 30 days of the deadline: $50 per form penalty
- Filing after the 30 days but before August 1: $100 per form
- Filing after August 1: $260 per form
- Intentionally failing to file: $350 per form
Another thing worth noting is that if the due date falls on a weekend or a legal holiday, the due date is pushed to the next business day.
How To Fill in IRS Form 1096?
Filing out Form 1096 is not a complicated process. Below is a list of the steps you need to follow:
Step 1: Fill Out All the Necessary Information Returns Forms
Before filing out the 1096 form, you must complete all the required information returns forms for your business. This could be your 1099-NEC, 1099-MISC, Form 3922, or any other form mentioned above. The number of returns filed and the information contained in these forms are critical when completing Form 1096.
Step 2: Fill Out the Top of the 1096 Form
In the upper left-hand corner of Form 1096, fill out your business' contact information, including your:
- Phone number
- Fax number
There is also a section labeled "name of person to contact" where you can put the contact information of your financial advisor or accountant. This way, the IRS can contact them directly if necessary.
Step 3: Fill Out the Boxes
Form 1096 has seven boxes containing all the information you need to submit.
Boxes 1 and 2
In box 1, you must fill out your employer identification number (EIN) if you have one. If you don’t have an EIN, proceed to box two and enter your social security number (SSN). Note that you’re required to fill in both an EIN and SSN.
In box 3, you indicate the number of forms you submit alongside Form 1096. For example, if you're submitting five 1098 forms, you write "5," and if you're submitting 20 1099-NEC forms, you write "20."
In box 4, you must indicate the total federal income tax withheld by your business based on the forms accompanying the 1096 form. You'd enter a zero if your company didn't withhold any federal income tax.
In box 5, indicate the total amount of reported payments from the forms attached to your 1096 form. For example, if you’re submitting fifteen 1099-MISC forms and each form is registering $1000, you write $15,000. Leave the box blank if you're filing forms 1099-A, 1099-G, or 1098-T.
Boxes 6 and 7
Under box 6, you mark an “X” to indicate the information return form that accompanies your Form 1096.
You would also need to mark a check in box 7 when filing form 1096 and a 1099-MISC form. If that's not the case, leave box seven blanks.
Step 4: Review the Form and Mail
Once you've completed Form 1096, cross-check the details to ensure everything is correct and mail it with the corresponding information returns. Form 1096 should be on top, separating the different types of returns.
Save Yourself the Trouble of Filing Form 1096
Filing tax returns can be intimidating, but you must do it correctly to avoid penalties and compliance issues. If you have hired or plan to hire independent contractors, consider Skuad. We will file the forms for you and handle all matters related to tax compliance, so you can focus on growing your business.
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