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, and is used to transmit paper Forms to the IRS.

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

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What is Form 1096 used for?

Form 1096 serves as a cover sheet that summarizes information returns you're filing with the IRS by mail. It's required when submitting paper copies of forms like 1099s, W-2Gs, and other information returns.

Here are the most common situations when you'll need Form 1096:

• 1099-MISC filings: When reporting payments to independent contractors
• Stock option transfers: Accompanying Form 3921 for incentive stock option exercises
• IRA accounts: With Form 5498 for employer-maintained retirement accounts

Here's the thing—Form 1096 is only required for paper filings. If you're filing electronically, you can skip this form entirely. In fact, following the Taxpayer First Act, the IRS has lowered the e-file threshold to 10 total information returns for filings on or after January 1, 2024, making electronic filing a requirement for many businesses.

Before filing, it's worth consulting your accountant to ensure you're following the right process.

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)

When filing by mail, organization matters. Here's how to get it right:

• Order matters: Place Form 1096 on top of your stack
• Group by form type: The IRS requires that you group the forms by form number and submit each group with a separate Form 1096.
• Double-check everything: Review with your accountant before mailing

Who needs to file Form 1096?

So, do you actually need to file Form 1096? It depends on how you're submitting your returns.

U.S. companies that paid contractors must file Form 1096 only when submitting paper returns to the IRS. If you're filing any of these forms by mail, you'll need Form 1096 as a cover sheet:

• 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 varies depending on the forms you are submitting. For Forms 1099-NEC, the deadline is January 31. For most others, including Forms 1097, 1098, 1099, and W-2G, you must file by February 28. The deadline extends to May 31 for Form 5498.

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 $340 per information return. If you intentionally file a fraudulent return, the penalty could be $5,000 or more.

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Filing Form 1096 is a straightforward but crucial step for any U.S. business paying contractors and filing information returns by mail. Getting it right helps you avoid penalties and stay compliant with the IRS.

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