What is a 1096 tax form?

Form 1096 is a tax form filed on behalf of businesses with the United States Internal Revenue Service (IRS) to accompany forms filed to report non-employee income. It summarizes the information in Forms 1097, 1098, 1099, 3921, 3922, 5498, and Form W-2G.

Form 1096 is only required if you’re filing your return by mail.

What is Form 1096 used for?

In most circumstances, small business owners file Form 1096 alongside a Form 1099-MISC, which is used to report payments made throughout the year to independent contractors. 

In addition, Form 1096 accompanies Form 3921, a tax form used by corporations to report each transfer of stock to any person related to that person’s exercise of an incentive stock option. For example, if an Oyster customer granted stock to an Oyster Team Member under its stock plan, a Form 1096 must be filed with the IRS. 

The same accompanying reporting and filing obligation would apply in the context of Form 5498, which is completed for each person for whom an employer maintains an IRA account. In instances where an IRA is maintained on behalf of an Oyster Team Member, the Oyster customer must file a Form 1096 along with Form 5498. 

There is a preferred mechanism and process for filing a Form 1096, so consult your accountant or a qualified tax professional before filing. Remember, the form is informational in nature, and it is only required if you are filing your returns by mail. 

What must be included in Form 1096?

You’ll need the following information to complete Form 1096:

• Your EIN or your SSN if you don’t have an EIN (in either instance, you should ensure the number you provide matches the number used on the information returns you completed, like a 1099-MISC)
• The number of forms you’re submitting with the 1096 tax return
• Any federal income tax withheld
• The total amount reported with Form 1096
• The information you’re submitting in connection with Form 1096 (for example, you’ll mark an X by 1099-MISC if that’s being submitted with Form 1096)

Returns filed by mail should be organized based on the form numbers, with Form 1096 on top. At that point, you should review your returns with your accountant or a qualified tax professional for accuracy before filing by mail.

Who needs to file Form 1096?

U.S. companies that paid contractors for work in the past year may need to file Form 1096. They only need to do so if they’re submitting their tax returns to the IRS through the mail rather than electronically. If you’re filing any of the following tax forms by mail, you will also need to file Form 1096:

• Form W-2G
• Form 1097
• Form 1098
• Form 1099
• Form 3921
• Form 3922
• Form 5498

Small business owners commonly need to file Form 1096 alongside their Form 1099-MISC, the tax form that reports payments to independent contractors. Employees and contractors are not responsible for filing Form 1096 alongside their other tax forms. 

Do you have to file Form 1096?

If you file electronically through the FIRE system (“Filing Information Returns Electronically”), you don’t need to worry about filing a Form 1096 at all. In addition, Publication 1220 has more information about e-filing Form 1096. The information the form otherwise provides is incorporated into the online process. The information captured on Form 1096 is also often included in a third-party software solution.

When is the due date for filing Form 1096?

The Form 1096 filing deadline is between January 31 and March 31, depending on the manner of filing and the accompanying information included in the filing.

What happens if you file late?

If you file Form 1096 late, the penalty is $50 per form if you submit it within 30 days of the due date. After that, the penalty increases to $100 per form. 

If you fail to file by August 1, the penalty increases to $260 per form. If you intentionally fail to file, the penalty becomes $530.

Disclaimer: This article and all information in it is provided for general informational purposes only. It does not, and is not intended to, constitute legal or tax advice. You should consult with a qualified legal or tax professional for advice regarding any legal or tax matter and prior to acting (or refraining from acting) on the basis of any information provided on this website.