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When your company works with independent contractors, you need to issue them Form 1099-NEC at the end of the tax year if you paid them more than $600. The Internal Revenue Service (IRS) uses the information you provide on Form 1099 to verify that a contractor or self-employed individual is claiming all the income they made during the year when they file their tax returns. Along with sending your contractors Form 1099, you also need to send the IRS Form 1096.
What is a 1096 form? Think of it as a cover letter you send to the IRS when you send in tax forms, such as Form 1099-NEC, that report non-employee compensation. Find out where to get 1096 forms, how to fill one out, and when you need to file it.
What is Form 1096 used for?
Form 1096, known as Annual Summary and Transmittal of U.S. Information Returns, is a summary form that you send along with tax forms:
You only need to send Form 1096 if you send informational tax forms to the IRS by mail. If you e-file, there’s no need to send the cover page with your forms. Depending on the number of different informational tax forms you file, you might need to fill out and send several Forms 1096. For example, if you send out 10 Form 1099-NEC, you can use one Form 1096 for them. If you also send out five Form 1098, you will need to use a separate Form 1096 for those forms.
It’s important to keep in mind that Form 1096 only goes with mailed-in tax forms. If you file electronically, the IRS has a different process to follow.
Who needs to file a 1096 tax form?
If your company sends informational returns to the IRS using the mail, you need to use Form 1096. You might need multiple copies of Form 1096, depending on the number of different informational forms you send. Here’s a rundown of the informational forms 1096 usually accompanies:
- Form 1097: Form 1097 reports tax credit distributions from mutual funds or bonds during the year.
- Form 1098: Form 1098 is the mortgage interest statement. If your company received more than $600 in mortgage interest from an individual during the year, you need to fill out the form and submit it to the payer and the IRS.
- Form 1099: There are 20 different types of Form 1099, from Form 1099-A, which reports canceled mortgage debt, to Form 1099-NEC, which reports non-employee compensation. If your company works with contractors, you will most likely send them Form 1099-NEC at the end of the year. Your company needs to fill out a separate Form 1096 for every type of 1099 you send. For example, if you send five Form 1099-MISC and five Form 1099-NEC, you need to send in two Form 1096.
- Form 3921: If an individual exercises stock options during the year, your company needs to fill out Form 3921 to report it.
- Form 3922: Similarly, Form 3922 reports the transfer of a stock to an employee from a corporation.
- Form 5498: If your company maintains Individual Retirement Accounts (IRA) for people, it needs to send them Form 5498 at the end of the year to report any contributions they made to the account.
- Form W-2G: Don’t confuse Form W-2G with Form W-2. Form W-2 is the wage and tax statement your company sends to employees at the end of the year. It summarizes how much each person made and the taxes they paid. Form W-2G reports winnings from certain types of gambling. It also reports how much federal tax, if any, was withheld from those winnings.
How to fill out IRS Form 1096
Form 1096 instructions are pretty straightforward, although there are two things that you absolutely must remember when filling out the form. First, you need to get an official version of the form from the IRS. You can’t print a copy from the IRS website. Second, you need to use a separate Form 1096 for each type of informational return you submit.
For that reason, it’s a good idea to complete your company’s informational returns before you begin Form 1096. You’ll know how many versions of Form 1096 you’ll need to fill out and submit if you complete your informational forms first. Otherwise, you might have to circle back and start the process over again.
Here’s how to complete Form 1096 for each type of informational form you send in:
Enter your company’s information
The first step when filling out Form 1096 is pretty simple: entering your company information. Put your company’s name or the filer’s name in the box on the top left of the form. Under the name, enter the mailing address of the filer. Then, add information about the person the IRS should contact if necessary. Put their name as well as a phone number and email address. There’s also a space for a fax number if your company uses one.
The address and contact information you provide on Form 1096 needs to match the address and information you put on the informational forms.
There’s a box on the right side of the form marked “for official use only.” Leave that section blank.
Add your tax ID number
After you put in your company’s name and contact information, there are two spaces where you can put your tax identification number. If your company has an employer identification number (EIN), enter it in box 1. If you’re a sole proprietor or self-employed, you might not have an EIN. In that case, enter your Social Security number in box 2.
You only need to put a number in either box 1 or box 2. If you have both a Social Security number and an EIN, only use the EIN.
Ensure that the number you enter matches the number you put on the informational forms.
Add up the number of forms
Box 3 is where you write the number of forms you’re sending in with this particular Form 1096. For example, if you’re sending in 20 of Form 1099-NEC, write 20. If you’re sending in 20 of Form 1099-MISC and 20 of Form 1099-NEC, write 20, not 40, as you’ll be completing a separate form for each type of 1099.
Also, make sure you count the number of individual forms you’re submitting rather than the number of pages you’re sending.
Report the amount of tax withheld
Your company might have withheld federal income tax from certain payments it made, such as gambling winnings or payments to non-employees. If that’s the case, add up the total from each form and enter the amount in Box 4 of Form 1096. If you didn’t withhold any federal tax, write “0” in the box.
Report the total amount of the forms
You might need to do a bit of math at this next step. In Box 5, you’re asked to report the total amounts from the forms you’re sending with Form 1096. You can leave Box 5 blank if you’re sending in the following forms:
Otherwise, you’ll need to look in certain boxes on each form and add up the totals before submitting. Some forms require you to add up multiple boxes. The boxes to look at are:
- Form 1097-BTC: Box 1
- Form 1098: Box 1 and Box 6
- Form 1098-C: Box 4c
- Form 1098-E: Box 1
- Form 1098-F: Box 1
- Form 1098-Q: Box 4
- Form 1099-B: Box 1d and Box 13
- Form 1099-C: Box 2
- Form 1099-CAP: Box 2
- Form 1099-DIV: Box 1a, Box 2a, Box 3, Box 9, Box 10, and Box 11
- Form 1099-INT: Box 1, Box 3, Box 8, Box 10, Box 11, and Box 13
- Form 1099-K: Box 1a
- Form 1099-LS: Box 1
- Form 1099-LTC: Box 1 and Box 2
- Form 1099-MISC: Box1, Box 2, Box 3, Box 5, Box 6, Box 7, Box 8, Box 10, Box 13, and Box 14
- Form 1099-OID: Box 1, Box 2, Box 5, Box 6, and Box 8
- Form 1099-PATR: Box 1, Box 2, Box 3, and Box 6
- Form 1099-Q: Box 1
- Form 1099-QA: Box 1
- Form 1099-R: Box 1
- Form 1099-S: Box 2
- Form 1099-SA: Box 1
- Form 1099-SB: Box 1 and Box 2
- Form 3921: Box 3 and Box 4
- Form 3922: Box 3, Box 4, and Box 5
- Form 5498: Box 1, Box 2, Box 3, Box 4, Box 5, Box 8, Box 9, Box 10, Box 12b, Box 13a, and Box 14a
- Form 5498-ESA: Box 1 and Box 2
- Form 5498-QA: Box1 and Box 2
- Form 5498-SA: Box 1
- Form W-2G: Box 1
Double-check your math before putting the amount into Box 5 to ensure it’s correct. Also, remember only to put the total from the particular form you’re submitting Form 1096 for, not the total amount from all informational returns.
Choose the type of form you’re sending in
Box 6 presents a list of all the informational forms you might use Form 1096 with. Select the form you’re attaching Form 1096 to, then put an “X” in the box beneath it. Only put one X in one box, as you’ll use a separate Form 1096 for each type of informational form. Also, make sure you’re selecting the right form before you check the corresponding box.
Sign the form
The last step when filling out Form 1096 is to sign it, verifying that the information is correct. Include your signature and title, as well as the date you completed the form when submitting it.
Before you sign, take a minute to review the document to make sure all the information is correct and that it is legible. Put the form on top of the informational forms you’re sending with it and get ready to fill out additional Forms 1096, as needed.
Where to send Form 1096
If you are completing Form 1096, it’s because you are filling out and submitting informational returns by mail. You’ll need to mail the forms to the IRS. The address to use depends on the location of your business. If you’re in the following states:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
Send your forms to the IRS Austin Submission Processing Center in Austin, Texas.
If your company is in:
- North Dakota
- South Carolina
- South Dakota
Send your forms to the IRS Center in Kansas City, Missouri.
Finally, if your company is in:
- District of Columbia
- Rhode Island
- West Virginia
Send your forms to the IRS Center in Ogden, Utah.
Since the mailing addresses are subject to change, it’s a good idea to check with the IRS before submitting Form 1096. Also, keep in mind that if your company is submitting more than 250 of any particular forms, you can’t use the mail-in option and must file electronically.
Why can’t you print Form 1096?
When you send Form 1096 to the IRS, it uses a scanner to read the information on the form quickly. Scanning the forms streamlines the process for the agency. Otherwise, it would need to input all the information by hand. While the IRS provides copies of Form 1096 online, it stresses that you can’t actually use a printed copy of the form when you submit it.
The equipment the IRS uses can’t scan printed copies. To get a scannable copy of Form 1096, you need to request it from the IRS. Fortunately, the forms are free. You should receive yours about 10 days after submitting your request, so be sure to allow enough time before the due dates.
You might find it easier to file your informational returns online. To file electronically, you need to use the IRS FIRE System. While electronic filing is required for companies with more than 250 forms, the IRS also encourages companies with fewer forms to use the e-file option.
1096 due dates
The due dates for Form 1096 depend in large part on the type of informational forms you’re submitting. Generally speaking, the deadline is February 28 of the year after the tax year. So, for the 2021 tax year, the deadline for Form 1096 is February 28, 2022.
The February 28 deadline applies to the following forms:
- Most types of 1099
There is an exception for some types of Form 1099, though. If you’re submitting Form 1099-NEC, you need to file by January 31.
For Form 5498, the deadline is May 31.
There are penalties if your company doesn’t file its informational forms on time. The penalties are based on the size of your business and start at $50 per return.
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THIS INFORMATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Globalization Partners does not provide legal or tax advice and the information is not tailored to the specific situations of your company or your workforce. Globalization Partners makes no representations or warranties concerning the accuracy, completeness or timeliness of this information. Globalization Partners shall have no liability arising out of, or in connection with, the information, including any loss caused by use of, or reliance on, the information.