Form 1096: Know when to use this form for contractor compensation
Do you operate or own a small business that employs independent contractors throughout the year? Do you also file all of your forms using paper? If so, there’s a special tax form you’ll want to hear about—Form 1096.
You can think of IRS Form 1096 as a cover sheet of sorts, used for reporting non-employee compensation to the IRS. Read all about the 1096 tax form, including what it is, who files it, and how to file it below…
What is Form 1096?
As a small business owner, you are probably well-versed in Form 1099-NEC or 1099-MISC, as these are and were the forms to send independent contractors and vendors who you pay more than $600 per year to. So, “what is form 1096?”
Officially titled, the “Annual Summary and Transmittal of U.S. Information Returns”, Form 1096 is as the name implies—a summary of non-employee compensation.
Form 1096 summarizes information for many different types of informational tax returns that apply to small business owners:
- Form 1099 (MISC and NEC)
- Form 3921
- Form 3922
- Form W-2G
But, there’s a catch. Form 1096 is only used when filing taxes via mail. (So, not electronically or through a tax software program)
Here’s a quick use case…You hire an independent contractor to help with your business. You pay them $5,000. You then send them Form 1099-NEC to notify them of the amount you paid to them, but you’ll also file Form 1096 with the IRS to summarize information on this form.
A word to the wise—you could file multiple 1096 tax forms… In fact, you should submit one Form 1096 per informational return (any of the items in the list above). So, if you had two employees in addition to your one independent contractor, you would mail one Form 1096 with the Form 1099-NEC and you would mail one Form 1096 with two W-2s.
Who files IRS Form 1096?
This form is exclusively for any business owner who files paper Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. If you file any of those forms—and paper file—you’ll likely have to file IRS Form 1096. Employees don’t need to file this form.
Instructions for the 1096 tax Form
The 1096 tax form is a one-page form with multiple parts.
In part one, you’ll need to fill in your:
- Business name
- Business address
- Employer Identification Number (EIN) / Social Security number
- Name of person to contact
- Email address, phone number and fax number
- Total number of information tax returns transmitted with this form
- Federal income tax withheld
- Total amount of reported payments
In part two, you’ll fill in the type of form you’ll attach to the Form 1096. There should only be one “X” marked, as you have to file a separate 1096 for each corresponding form.
This form also requires you to fill out a signature, title, and date.
Where to get Form 1096
You can order Form 1096 from the IRS or call 1-800-tax-form (800-829-3676) during normal business hours to request the form. You cannot download Form 1096 from the IRS website. The official printed version of Form 1096 is scannable and read by a machine (optical character recognition equipment). You cannot file Form 1096 or Copy A of Forms 1099 or 3921 that you print from the IRS website.
Sound like a lot of work? Don’t let these filing needs keep you from running your business! Our small business certified tax pros can help you manage and file required tax forms.
When to file Form 1096
File Form 1096 with Form 1099-NEC to the IRS by January 31 (for the previous tax year). Most likely, you’ll already have what you need to complete Form 1096 by this date as you’ll need to send your contractors their Informational tax returns, by January 31.
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