Form 1096 — also called the Annual Summary and Transmittal of U.S. Information Returns — is a summary form that you’ll file to the IRS along with any tax form that reports non-employee compensation, including the 1099-Nec.
With the ever-growing gig economy, many small business owners make use of independent contractors. And if you’ve paid one of these workers more than $600 in a calendar year and file your taxes by mail, you’ll need this form.
Like any tax topic, this can get confusing. Let’s break down exactly what this form is used for and how to file it.
What Is Form 1096 Used For?
Form 1096 is used as a cover sheet when filing forms that report non-employee compensation. This includes things like independent contractor payments, rent payments, collected mortgage, gambling wins, or other expenses that aren’t your payroll.
Keep in mind: You only need Form 1096 if you submit non-employee compensation forms by mail. You don’t need it to file electronically.
Who Needs To File Form 1096?
Small businesses that need to report non-employee income to the IRS must file Form 1096 if they’re submitting their taxes by mail. When you pay a contractor $600 or more during the calendar year, you need to submit Form 1096 to the IRS.
Non-employee payment forms that require a Form 1096 cover sheet include:
- Form 1099-Nec
- Form 1099-Misc
- Form 1097
- Form 1098
- Form 3921
- Form 3922
- Form 5498
- Form 8935
- Form W-2G
Where Do I Get Form 1096?
Form 1096 needs to be scannable, so you can’t download and print it from the internet. To get the form, order it from the IRS website. If you print the form from the internet and the IRS can’t scan it upon receipt, you’ll be charged a penalty.
On the IRS website, pick the form you need and input how many copies you’re looking for. Although you need to click “add to cart” to order, you won’t be charged for the forms.
You can also order Form 1096 over the phone or purchase it from some office supply stores.
How To Fill Out Form 1096
Filling out Form 1096 is relatively straightforward, as it only serves as a cover sheet for your more complex tax forms. It’s important to note that you need a 1096 form for each different type of non-employee compensation form.
So if you’re filing six Form 1099-Nec and two Form 1098, get two copies of Form 1096 and attach one to your 1099-Nec forms and the other to your 1098 forms.
Top of the Form 1096 and Boxes 1 and 2
On the top of the form, write your name, street address, and other personal contact information. Remember: The information on this form should be yours, not the independent contractor or sole proprietor the non-employee compensation form is for.
Form 1096 Box 3
On box 3, write the total number of forms you’re submitting. Form 1096 is a cover sheet for any forms of the same type, so in box three input how many forms of that specific type are included in your submission.
Form 1096 Boxes 4 and 5
In boxes four and five, report how much federal income tax was withheld and how much income you’re reporting on this 1096 form. Remember: Each type of form needs its own Form 1096, so don’t write the total amount of reported non-employee compensation across multiple forms—only write the amount you are reporting on this specific one.
Form 1096 Box 6
The last box is a checkbox. Simply check the box that corresponds to the type of form you are filing. So, if you need to file a 1099-Nec, for example, you’d check that box.
How to File Form 1096
Attach Form 1096 to whatever other form you’re filing. To file with the IRS via mail, make sure it’s postmarked to the IRS by the tax deadline. While most forms are due to the IRS by February 28, each form has its own due date. Make sure you look into exactly when your form is due.
A few common alternative due dates include:
- Form 1099-Nec is due January 31
- Form 5498 is due June 1
- Form W2-G is due by January 31
Keep in mind that meeting the deadline means your form is postmarked by the due date, not necessarily that it is delivered by the due date.
Stay Ahead of Tax Season
Paying independent contractors or sole proprietors—especially global ones—requires organizational prowess and a proclivity for remembering dates. But, when you’re a business owner, you likely have a lot of other work on your plate. That’s when a Contractor Management and global workforce partner can step in to help you stay ahead of your finances and navigate compliant payments across the globe.
Contact us to see how we can help your growing business.