Farwah Jafri | September 21 2023
In the business world, a need often arises to engage workers outside the traditional employee category to accomplish specific tasks. When you enlist the services of contractors or vendors, it becomes imperative to provide them with the necessary paperwork for accurate reporting on their tax returns. It entails the preparation of Form 1099-NEC or 1099-MISC. Additionally, you are required to submit Form 1096 alongside Form 1099 when forwarding them to the IRS.
This comprehensive guide will delve into the specifics of IRS Form 1096, shedding light on its purpose, filing instructions, acquiring copies, submission locations, and the crucial deadline.
IRS Form 1096, titled ‘Annual Summary and Transmittal of U.S. Information Returns,’ is a vital document for summarizing the information returns your business submits to the IRS. This information return typically includes Forms 1099-MISC and 1099-NEC.
Form 1096 also serves as a summary tool for other information returns, such as Forms 1099-DIV and 1099-INT. It’s crucial to note that you must complete a separate Form 1096 for each type of return you file. For instance, if you are issuing Form 1099-MISC to 20 individuals and Form 1099-DIV to one individual, you must prepare two Forms 1096 to send to the IRS.
It’s essential to understand that Form 1096 should be filed with others. You must only complete it if you are filing the corresponding information returns. Moreover, it should be submitted alongside these returns to the IRS.
Unlike Forms 1099-NEC or 1099-MISC, you should not provide Form 1096 to independent contractors or relevant state tax agencies. Its destination should solely be the IRS.
Additionally, if you opt for electronic filing of information returns, there’s no need to file Form 1096. Electronic filing is mandatory for businesses filing 250 or more of a particular type of return.
When filling out Form 1096, include pertinent information such as your details – name, address, phone and fax numbers, and email address. Moreover, you must provide your business’s FEIN or your Social Security number.
Record the total count of forms you are submitting alongside Form 1096. You should also input the aggregate amount of money as documented on the corresponding information returns.
Lastly, you will be required to mark an ‘X’ next to the type of form you are filing. For example, if you are submitting Forms 1099-NEC, make sure to tick the corresponding box.
To obtain Form 1096, you can place an order with the IRS. Please refrain from printing and utilizing Form 1096 from the IRS’s website, as it is not a printable version and could potentially result in penalties if used incorrectly. While these forms are free from the IRS, there may be limitations on the quantity available. For further information regarding these limits, it is advisable to contact the IRS directly.
Orders can be placed through the IRS’s official website or by calling 1-800-829-3676. Your requested documents will be delivered within approximately ten business days.
Additionally, some accounting software provides the convenience of generating and printing unlimited Forms 1096 and 1099, streamlining the process for businesses.
Form 1096 submission is directed toward the Internal Revenue Service (IRS). The specific mailing address to dispatch your information returns along with Form 1096 is contingent on the location of your principal business.
For detailed guidance, getting in touch with the IRS is advisable.
The deadline for submitting Form 1096 hinges on the corresponding due dates for the information returns you are transmitting.
The potential due dates encompass January 31, February 28, and March 31, contingent upon the nature of the summary and the mode of submission.
If you intend to report non-employee compensation through Form 1099-NEC to independent contractors, the IRS, and relevant state tax agencies, the deadline for both Form 1099-NEC and Form 1096 is January 31.
In case you are employing Form 1099-MISC for reporting different types of 1099 vendor payments, or if you are filing specific other information returns (e.g., Form 1097), the deadline extends to February 28 (for paper submissions) or March 31 (for electronic submissions).
To complete Form 1096, you will need to gather the following essential details:
1. Your Employer Identification Number (EIN) or Social Security Number (SSN) if you lack an EIN. It’s crucial to ensure that the number you provide matches the one used on your completed information returns, such as the 1099-MISC.
2. The number of forms you intend to submit alongside the 1096 tax return.
3. Any federal income tax that has been withheld.
4. The total sum reported on Form 1096.
5. The specifics of the information you’re submitting concerning Form 1096. For instance, you should mark an “X” next to 1099-MISC if you include it with Form 1096.
For mailing your returns, it is advisable to organize them by their form numbers, placing Form 1096 on top. Before sending them via mail, you should review your returns for accuracy in consultation with an accountant or a qualified tax professional.
U.S. companies that have paid contractors for services rendered during the previous year may be obligated to file Form 1096. This requirement applies if they submit their tax returns to the IRS through postal mail rather than electronically. If you are mailing any of the following tax forms, you will also need to include Form 1096:
– Form W-2G
– Form 1097
– Form 1098
– Form 1099
– Form 3921
– Form 3922
– Form 5498
Small business owners frequently need to file Form 1096 along with their Form 1099-MISC, the tax form used to report payments made to independent contractors. However, it’s important to note that employees and contractors are not responsible for submitting Form 1096 alongside their other tax forms.
If you choose to file electronically through the FIRE system (Filing Information Returns Electronically), there is no need to file a Form 1096. Moreover, you can find additional information about electronic filing Form 1096 in Publication 1220, as the electronic filing process incorporates the information typically provided on the form. Many third-party software solutions also capture the information that Form 1096 typically conveys.
In the business realm, Form 1096 primarily functions as a summary document for nonemployee compensation, encompassing payments made to independent contractors, as reported on Forms 1099-NEC. In essence, Form 1096 is the equivalent of Form W-3, used to transmit Wage and Tax Statements (Form W-2) to employees. Just as Form W-2 indicates the earnings of employees, Form 1099-NEC delineates the payments made to independent contractors, while Form 1096 summarizes these payments for IRS submission.
Also Read: A Complete Guide To IRS 941 Form Submission
Farwah is the Product Owner of Monily. She has an MBA from Alliance Manchester Business School, UK. She is passionate about helping businesses overcome challenges that hamper their growth, which is why she is working at Monily to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth.
