To run a business efficiently, we need to hire workers from outside, not as employees, for taking out certain tasks. For instance, when we hired independent contractors, we had to submit Form 1099-MISC so they could accurately file their own tax returns. Similarly, we also need to submit Form 1096 with other Forms we send to the IRS (Internal Revenue Service), say 1099-DIV and 1099-INT, etc.
What is Form 1096
There is no need to file Form 1096, Annual Summary and Transmittal of U.S. Information Returns, on its own, especially if you file information returns electronically. Form 1096 is a document summarizing the information returns you are filing with the IRS, such as Forms 1099-MISC.
So, it is only required when you are to file one of its corresponding information returns. And, it must be sent along with those returns to IRS.
Though, unlike 1099-MISC, you are not to send 1096 to independent contractors or applicable state tax agencies. It is only to be sent to IRS.
Other forms, though less likely to be filed by a small business, but also requiring 1096 cover sheets include Forms 1097, 1098, 3921, 3922, 5498, 8935, and W-2G.
For instance, you paid 3 contractors an amount of over $600 each in a tax year. Only one 1096 is required to cover all three 1099-MISC. However, as mentioned above, 1096 is not required if you are filing 1099 online. It is only used for submissions in physical form.
And do remember, if 250 or more of a certain type of returns are to be submitted with IRS, filing electronically is mandatory.
Decoding Form 1096
This form consists of two parts mainly.
The first part, of boxes 1-5, asks for basic information like name, address, contact information, Federal Employer Identification Number (FEIN), and the total number of 1096 forms you’re submitting to IRS this financial year. If you don’t have an FEIN, you should write down your Social Security Number (SSN) instead. The total amount of money recorded on the corresponding information returns also need to be mentioned.
Do keep in mind that the information you’re entering here is about you, not about the independent contractor you’re submitting 1099 for.
In the second part, Box 6, every possible form is listed, that 1096 could be attached with. Below each form name is a box for you to mark an “X” inside and indicate which form is being attached to that particular 1096. Say you are filing Forms 1099-A, mark the box next to it.
How many 1096s to file
Every Form 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G that you submit with IRS must have their own Form 1096 cover sheet attached to them. Since each form needs its own 1096, so only a single “X” mark would be there in box 6 on every 1096 submitted.
There are 16 different versions of Form 1099 and IRS treats every version as a separate type of form.
Keep in mind that for filing 250 or more forms, you are to submit. Failing to do so could invite a penalty from the IRS.
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Where to get 1096s
1096s are to be ordered from the IRS. You are not to download, take prints and use this Form from the IRS’s website. You may be penalized for using it.
For the IRS to process your 1096s, a scannable version of the document must be submitted. It is not a printable Form. Printouts of the Form will result in a document that cannot be scanned.
Ordering Form from the IRS is free, but in limited quantity only. 1000 copies for each Forms and 25 copies each for instructions and publications.
You can place your order using the IRS’s website or by calling its toll free number, ahead of time. Once your order has been placed, the package should arrive within 10 business days.
**You can place the order for the Tax Year 2020, though these orders for 2020 products from IRS are not being shipped as of now. The requests are being held and will be automatically shipped once the products get available with IRS. No need to reorder them.
How to take scannable version of 1096
- Visit www.IRS.gov/orderforms.
- Click on “Online Ordering for Information Returns and Employer Returns”.
- Fill in the number of 1096s you want IRS to mail you into the menu below.
- Go to “Add to Cart” to add the Forms to your order.
- Click on “View Cart” button
- And now the “Checkout” option in your shopping cart when you are finished with your order.
These forms are provided by the IRS for free, and the package is received within 10 business days.
Or you can call at the toll-free number during the day Monday to Friday, to order any of these IRS Forms. Keep your name, address and contact information ready with you when you call.
How to File Form 1096
For all small business owners, chances are, they’ll be using Form 1096, mainly, to submit some version of Form 1099. To follow IRS instructions, individuals filing 1099s electronically do not need to submit any accompanying 1096.
If you’re filing any of the other forms associated with Form 1096 electronically, you must use the IRS’s FIRE system to submit them. (Check Publication 1220 for more information about e-filing Form 1096.)
When to File 1096
For the year 2020, the final dates for filing Forms with IRS are yet to be declared. For information purposes, let’s keep the dates of filing 2020 reporting dates in mind. Thereby, for submitting Form 1096 to cover Form 1099 and, in case you’re reporting payments in box 7, both these Forms were to be filed to the IRS by January 31. Else, the deadline was February 28, 2020, if filed on paper, and March 31, 2020, for filing electronically.
If you were to submit Form 1096 with other Forms such as 1097, 1098, 3921, 3922, or W-2G, the deadline was February 28.
If any of these forms were filed late, the penalty was $50 for each form if submitted within 30 days of the due date. After that, the penalty raised to $100. For those who failed to file by August 1, the penalty went up to $260. If the delay was intentional, the penalty increased to $530.
**For the Tax Year, Form 1099-NEC has been revived with some modifications, to report payments of nonemployee compensation (NEC) that were previously reported in box 7 on Form 1099-MISC. To report NEC, therefore, no need to order Form 1099-MISC.
Whenever Form 1096 for 2020 become available at the IRS site, they are quite simple to file. However, the complex part is filling and submitting the Forms it will accompany. Though you don’t need to submit them until early next year, it is always advised to be prepared. And to keep ready in advance, the first thing to consider is hiring an expert tax, accounting, and bookkeeping services. AutoFilings is one such service provider, committed to facilitating easier business reporting.
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Frequently Asked Questions
recipients. You don’t need to use Form 1096 if you are filing electronically. If you have 250 or more of any single type of
information return, they must be submitted electronically for that type of return.
the accompany 1099-MISC Copy A forms (the 1096 and 1099 Copy A forms must be together) were to be mailed to the IRS by
file Form 1096 downloaded from IRS website. Else, a penalty may be imposed for filing the forms that can’t be
submitted if you are filing your returns online.
necessary forms, fill them out and submit for processing. Remember that it’s unnecessary to complete a corrected
submit, file them with a new Form 1096. Don’t include copies or information from earlier filed returns.