We’re all familiar with the concept of income tax forms. These pesky documents are an inescapable part of life for individuals and businesses alike. US-based companies that work with freelancers and contractors will know all about IRS forms 1099-NEC and 1099-MISC, which report nonemployee compensation. There’s a small caveat that comes with filing this information, though: IRS form 1096.
“Another form?” you might ask. It does seem unnecessary, but form 1096 actually expedites the tax return process. Unlike other tax forms, this one is easy to understand. Keep reading to learn what IRS form 1096 is, who should file it, and how to correctly fill it out.
What is IRS Form 1096?
Also known as Annual Summary and Transmittal of U.S. Information Returns, IRS form 1096 is a summary document. It accompanies forms 1097, 1098, 1099, 3921, 3922, 5498, or W-2G and all of their variants when they’re submitted by mail. Form 1096 immediately lets the IRS know what information you’re submitting.
IRS Form 1096 (Source)
For each type of information return you submit (i.e., the forms listed above), you have to file a separate 1096 form. So, if your company submitted five 1099-NEC forms and three 1099-MISC forms, it has to file two 1096 forms — one summarizing the information on the 1099-NEC forms and one summarizing the information on the 1099-MISC forms.
Who has to file IRS Form 1096?
If you submit any of the forms listed above by mail, you need to file IRS form 1096. On the other hand, companies that file returns digitally do not need to submit 1096 forms at all. You can choose to file by mail or electronically (e-file), but, according to the IRS, if you plan on submitting more than 250 of any type of information return, you have to do it electronically — which means no Form 1096 for you.
Business owners who use the services of nonemployees typically file forms 1099-NEC and 1099-MISC. However, they're not the only ones who have to file form 1096. Any individual or business owner who files any of the following forms must also file form 1096:
- Form 1097: For issuers and recipients of certain tax credit bonds, including mutual funds and partnerships, who distribute the credit.
- Form 1098: Used to report mortgage interest of $600 or more received during the year in the course of your business.
- Form 1099: Series of documents referred to as information returns pertaining to different types of compensation (contractor payment, rent, royalties, dividends). There are nearly 20 versions of form 1099, including 1099-NEC, 1099-MISC, 1099-A, 1099-C, and 1099-CAP.
- Form 3921: Corporations file this form to report each transfer of stock to any person in accordance with that person’s exercise of an incentive stock option.
- Form 3922: Corporations use this form to report each transfer of the legal title of a share of stock acquired by an employee in accordance with that employee’s exercise of an option granted under an employee stock purchase plan.
- Form 5498: Form submitted for each person for whom you maintained an individual retirement account (IRA).
- Form W-2G: To report gambling winnings and any federal income tax withheld on those winnings.
How to file IRS Form 1096
Filling out and filing form 1096 is a short and sweet process. Follow these four easy steps to make sure you report nonemployee compensation (and anything else that requires a 1096 form) correctly.
1. Get a copy
Form 1096 is submitted in paper form, so the IRS requires companies to use scannable and official documents. You can’t print the PDF directly from the IRS’ website nor use photocopies of the original. There are several ways to acquire the form:
- Order a copy directly from the IRS’ Order Forms & Publications page
- Call 1-800-TAX-FORM (800-829-3676) to request a copy via phone
- Buy it at office supply stores
- Use your tax preparation software (if you have one)
2. Enter your basic information
In the upper-left corner of your tax form 1096, you’ll add the basics — company name, address, and contact information (email, phone number, and fax number). You may choose to put down the contact information of your accountant or financial advisor instead of the company’s. This way, the IRS can refer directly to them in case a situation that requires expert knowledge arises.
3. Fill out the boxes
Tax form 1096 includes six boxes that summarize information about the documents you’ll be submitting.
Box One. If you have an employer identification number (EIN), this is where you put it. Skip box two.
Box Two. If you don’t have an EIN, write down your Social Security number here.
Box Three. This is the box where you indicate how many forms you’re submitting along with this 1096 form. So, if you’re submitting five separate 1099-NEC forms, you write down “5.” If you’re submitting two 1098 forms, you write “2.”
Box Four. Box Four asks for “federal income tax withheld,” and it’s based on the information returns that accompany the 1096 form. You have to write down the total amount of tax withheld from all the forms. If you didn’t withhold any taxes (which is common with 1099 forms and independent contractors), put down a “0.”
Box Five. This box asks for the “total amount reported with this Form 1096.” If you are filing forms 1098-T, 1099-A, or 1099-G, leave this section blank. For any other form, enter the sum of reported payments on all the forms you’re submitting. So, if you’re submitting ten 1099-MISC forms and each form reports $500, you write “$5,000” in Box Five.
Box Six. The final box is where you indicate the type of information return that accompanies your IRS form 1096 — remember, only one type of information return per 1096 form! You indicate which form you’re submitting by marking an “x” on the respective box.
4. Review and mail
Once you’re done filling out your 1096 forms, review each one separately to make sure all the information is correct. Then, make your own copies of each 1096 form and of the information returns and archive them for future reference, planning, and company audits.
Organize your returns based on their number and put the respective 1096 on top. Since the IRS form 1096 works as a summary of each type of information return, it makes sense that it’s the first thing the IRS should see. Imagine you’re filling two 1097 forms and four 1099-NEC forms. In the correct order, it would look like this:
- Form 1096 summarizing Forms 1097
- The two 1097 forms
- Form 1096 summarizing Forms 1099-NEC
- The four 1099-NEC forms
When all your forms are nicely stacked up, it’s time to mail them. The address you put down depends on your company’s location. Refer to the IRS’ Where To File Form 1096 page to find which address applies to you.
The deadline for filing forms 1097, 1098, 1099, 3921, 3922, or W-2G and the accompanying 1096 forms is February 28. Form 1099-NEC is the exception. Along with the respective 1096 form, you have to submit it by January 31st.
Tax filing can be overwhelming, but it’s important you do it correctly and on time to avoid penalties. Form 1096 adds some extra legwork, but nothing too major. The best course of action is to start preparing for tax season early. Don’t wait until a couple of weeks before you have to file taxes to start gathering and filling out forms. Give yourself, your finance team, and your accountant enough time to get everything done, reviewed, and sent to the IRS.
With Pilot, you’ll have one less thing to worry about at tax time — we always file 1099 forms electronically for you. That means you’ll never even have to worry about Form 1096, and can rest assured that we’ll file your 1099s on time. Try us out today and find out how we streamline tax filing for you, taking tax compliance worries off your plate.
⚖️ Legal Disclaimer: The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Cover photo of stationery courtesy of Savannah Wakefield at Unsplash