Form 1096 is a summary form that U.S. businesses use to report any tax forms that report non-employee compensation to the Internal Revenue Service (IRS) by mail.
Form 1096 is also called the Annual Summary and Transmittal of U.S. Information Returns. It acts as a cover sheet that includes summary information about the total number of returns, the total amount on those forms, and any other relevant details on the returns.
What is Form 1096 used for?
Form 1096 helps summarize its accompanying non-employee compensation tax forms, such as Form 1099-NEC for contractor payments. It is used for forms 1099, 1097, 1098, 3921, 3922, 5498, and W-2G.
Common non-employee compensation includes contractor payments, rent payments, collected mortgage, dividends, or other miscellaneous expenses not included in payroll. When filing several types of return forms, a separate Form 1096 must summarize each type.
Form 1096 does not report specific income information; instead, it serves as a transmittal form or summary for the information returns that go with it.
Who files Form 1096?
A business submitting multiple tax forms to report non-employee compensation must also send an accompanying Form 1096. They must file Form 1096 if they submit their taxes by mail.
Businesses engaging and paying contractors typically use Form 1096 to submit multiple 1099-NECs to report payments of $600 or more to contractors during a calendar year.
Form 1096 filing example
A company hires a contractor for a specialized, short-term project and pays them $5,000 for their services during a tax year. The company also engages several other contractors for additional services, paying them each $5,000 for their work that year.
If the company plans to report these payments by filing Form 1099-NEC by mail for each contractor it paid, it must also include a Form 1096 to accompany the collective contractor Form 1099s to the IRS by mail.
Where do I get Form 1096?
Form 1096 must be scannable and can not be downloaded and printed online. The IRS will charge a penalty if they can’t scan the Form 1096 upon receipt. Businesses can order a scannable Form 1096 on the IRS website and will receive the form by mail with instructions.
Where do I mail Form 1096?
Form 1096 and its accompanying return forms must be postmarked to the IRS by each form’s correlating tax deadline. The designated IRS mailing address depends on the business's principal location.
When is Form 1096 due?
Each tax form has its own deadline, so the due date may vary depending on the tax returns for the corresponding Form 1096.
Most tax forms filed with Form 1096 are due by February 28. Form 1099-NEC is due by January 31, and Form 5498 must be filed by May 31. If any date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
Always check the current IRS guidelines for updates on the exact deadlines.
What is the penalty for filing Form 1096 late?
The IRS charges penalties to taxpayers who don’t meet their tax obligations. Failing to file Form 1096 and its associated forms on time can lead to penalty fees and interest until paid in full.
How to fill out Form 1096
You must fill out a Form 1096 for each different type of non-employee compensation form. To fill out Form 1096, complete the following steps:
- Filer’s contact information. Write your business name, address, and other personal contact information. The information on this form should be yours, not the contractor or sole the non-employee compensation form is for.
- Boxes 1 and 2. Enter the employer’s identification number and social security number.
- Box 3. Write the total number of forms of the same type you're submitting.
- Boxes 4 and 5. Report the amount of income and federal income tax withholding.
- Box 6. Check the box that corresponds to the type of form you are filing. For example, check Box 71 "1099-NEC" for contractor payments.
- Attach and send. Attach Form 1096 to all the corresponding tax forms you’re filing and mail them to the IRS by the tax deadline.
- Retain a record. After submitting Form 1096 to the IRS, keep a copy for your records and send a copy to the state tax department if applicable.
How to fill out a corrected Form 1096
If you file a return with the IRS and later discover you made an error on your Form 1096, you must correct it as soon as possible.
To correct Form 1096, file a Copy A, fill out another Form 1096, and enter an “X” in the “CORRECTED” checkbox. Send the corrected Form 1096 to the IRS and provide statements showing the correction to the recipients.
File your tax forms on time
While businesses filing tax forms incorrectly or late face noncompliance penalties, a contractor compliance partner can help optimize and streamline external workforce management.
Velocity Global’s international workforce management solutions help you navigate contractor payments and taxes for your distributed workforce. Our global partner network includes industry-leading experts on international legal and tax regulations to help you stay ahead of your finances, comply with local regulations, and grow your contingent workforce worldwide.
Disclaimer: The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. © 2024 Velocity Global, LLC. All rights reserved.
