IRS Form 1096

IRS Form 1096, officially titled the Annual Summary and Transmittal of U.S. Information Returns, is a critical document for businesses that file paper copies of information returns, such as Forms 1099, 1098, 5498, and W-2G, with the Internal Revenue Service (IRS). This form serves as a cover sheet, summarizing the total number of forms and payments reported, and is particularly relevant for small businesses, HR managers, and founders who hire independent contractors or manage other reportable payments.

For example, if your company has issued multiple Form 1099-MISC to independent contractors for services rendered during the tax year, you are required to submit these forms to the IRS. When filing these paper forms, you must include a completed Form 1096 summarizing the total number of 1099-MISC forms and the aggregate amounts reported. This process ensures that the IRS receives a consolidated overview of the information returns filed by your business.

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How Does The IRS Form 1096 Work?

Form 1096s function as a transmittal document, summarizing and consolidating key data from these returns for efficient IRS processing. Specifically, Form 1096 aggregates the total number of information returns submitted, the types of forms (e.g., 1099-NEC for non-employee compensation or 1099-MISC for miscellaneous income), and the total federal income tax withheld, if applicable.

For businesses, particularly those paying independent contractors or vendors $600 or more annually, Form 1096 accompanies paper submissions of information returns to the IRS. Each type of return requires a separate Form 1096 to ensure accurate categorization. For example, a business submitting five 1099-NEC forms and three 1099-MISC forms would file two distinct Form 1096s. This form is required only for paper filings, not for electronic submissions, which are mandatory for businesses filing 250 or more returns. By providing a clear summary, Form 1096 streamlines IRS review and helps businesses maintain compliance.

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Who Needs To File Form 1096?

Entities obligated to file Form 1096 include businesses submitting paper copies of information returns, typically those filing fewer than 250 returns annually. Common scenarios necessitating its use include:

• Form 1097: Entities that issue certain credit bonds who choose to distribute this credit must file this form for each tax credit distributed.
• Form 1098: This form is used by companies to report the mortgage interest greater than $600 they received during the year.
• Form 1099: This form is issued to individuals who have earned compensation of more than $600 from an entity that is not typically their employer.
• Form 3921: This tax form must be filed by companies when an employee has exercised an incentive stock option (ISO) during the past tax year.
• Form 3922: Corporations are required to submit this form to report each transfer of the legal title of a share of stock during the tax year.
• Form 5498: This form is submitted to report each Individual Retirement Arrangement (IRA) a company has with an employee.
• Form W-2G: This form is used to report gambling winnings and any federal income tax withheld on those winnings.

It is important to note that if any company files more than 250 information returns to the IRS, they will be required to do so electronically. The company would not be required to submit a form 1096 because filing information returns electronically exempts you from filing the form. 

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Steps for Filing 1096 Tax Forms

Proper filing of IRS Form 1096 ensures compliance when submitting paper copies of information returns, such as Forms 1099, 1098, 5498, or W-2G. The following detailed steps guide HR managers and founders through the process, minimizing errors and ensuring adherence to IRS regulations:

1. Obtain Form 1096: Secure the official, scannable Form 1096 directly from the IRS to meet processing standards. Order forms, allowing 10 days for delivery. Alternatively, tax software like TurboTax or H&R Block provides scannable forms or facilitates electronic filing. Avoid using non-official downloads, as they may result in penalties for non-scannable submissions.
2. Complete Form 1096 Accurately: Enter precise details, including the business’s name, address, Employer Identification Number (EIN) or Social Security Number (SSN), and contact information. Specify the total number of information returns, the type of form (e.g., 1099-NEC), and any federal income tax withheld. Use a separate Form 1096 for each return type. Double-check entries to avoid errors, such as incorrect EINs or payment totals, which could trigger penalties.
3. Attach Form 1096 to Information Returns: Affix Form 1096 as the cover sheet to the corresponding information returns (e.g., Copy A of Form 1099-NEC). Ensure forms are organized by type, as combining different return types under one Form 1096 is not permitted. Retain copies of all documents for your records.
4. Submit Form 1096 and Returns: Mail the completed Form 1096 with the information returns to the IRS address based on your business’s location, found at www.irs.gov/filing/where-to-file-form-1096. Use certified mail to track delivery. For businesses filing fewer than 250 returns, paper submission is acceptable; otherwise, electronic filing via the IRS FIRE system is required, eliminating the need for Form 1096.

Best Practices: Plan ahead to meet deadlines (e.g., January 31 for 1099-NEC, February 28 for most others). Use tax software to streamline calculations and reduce errors. Consult a tax professional for complex filings to ensure compliance and avoid penalties, which can range from $50 to $530,000 annually.

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Reporting Obligations for Businesses 

Companies are responsible for filing Form 1096 along with their information returns, including Form 1099, to report payments made to independent contractors, vendors, and other non-employees. This process is essential for fulfilling IRS reporting requirements and ensuring proper documentation of income payments throughout the tax year.

Information Required on Form 1096

Form 1096 requires businesses to provide essential information, including:

• The business’s name, address, and employer identification number (EIN).
• Total number of information returns submitted with the 1096 form.
• Aggregate amounts of federal income tax withheld.
• Contact details of the person responsible for filing.

Should a business choose to file the 1096 form by mail, they should carefully organize their information returns chronologically with the 1096 form on top. A tax expert should be involved in the filing process to ensure accuracy and compliance. 

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Deadlines for Filing Form 1096

Timely filing is critical to avoid penalties. Deadlines for Form 1096 depend on the type of information returns being submitted:

• Form 1099-NEC: Both the recipient copy and the IRS copy, along with Form 1096, are due by January 31.
• Most Other Forms (e.g., 1099-MISC, 1098): Due by February 28 for paper filings or March 31 for electronic filings.
• Form 5498: Due by May 31.
• If a deadline falls on a weekend or holiday, the due date shifts to the next business day.

Example: For the 2025 tax season, if January 31, 2026, is a Saturday, the deadline for Form 1099-NEC and Form 1096 would be February 2, 2026.

What Happens If You File The 1096 Form Late? 

Should a business file the 1096 form late, they will be subject to a fine of $50 for each form submitted. The $50 late fine only applies to submissions that are 30 days late. After this period, the late fine increases to $100 for each form submitted. 

Businesses that file their 1096 form after August 1 will be subject to a late fine of $260 per form. Any businesses found to fail to file intentionally will be charged $530 per form submitted.  

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How to Obtain Form 1096

Form 1096 must be scannable to meet IRS requirements, meaning it cannot be downloaded and printed from the internet for official use. Businesses can obtain the form by:

• Ordering it from the IRS website.
• Calling 1-800-829-3676 to request delivery, which typically takes 10 days.
• Using tax software or services (e.g., TurboTax, H&R Block) that provide scannable forms or handle filing.

Tip: Order forms early to ensure timely delivery before tax season deadlines.

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4 Common Errors to Avoid When Completing Form 1096

Accuracy and transparency when filing out Form 1096 is critical to avoid fines and penalties.  By   being conscious of the most common pitfalls when completing the form, you can avoid submitting an inaccurate summary to the IRS. Keep these four common mistakes in mind when completing the form:

1. Inaccurate Identification: Ensure that the filer's and recipients' identification details match official records to avoid confusion or miscommunication.

2. Calculation Errors: Double-check all calculations to avoid discrepancies between the individual 1099 forms and the summary on Form 1096.

3. Incorrect Totals: Ensure that you do not report on an incorrect cumulative amount. Double check that the total number of 1099 forms submitted alongside Form 1096 are accurately indicated in the submission.

4. Missing EIN: To prevent setbacks or delays, ensure that the Employer Identification Number is provided and accurate.

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Stay Compliant With Playroll

Playroll is a global HR platform that helps companies of all sizes stay compliant when hiring, managing and paying employees or independent contractors. Our team does the heavy lifting to ensure all required employer taxes are paid as part of seamless payments for your distributed team, and keeps you updated on ever-changing local regulations.

Chat to our team to find out more.