IRS Form 1096 Instructions: How and When to File It

Form 1096 is an IRS form submitted as a summary accompanying other information returns — Forms 1097, 1098, 1099, 3921, 3922, 5498, W-2G — when you file these returns by mail. When you file IRS Form 1096, you’ll need to complete a separate form for each of the different types of return you’re submitting, i.e. one Form 1096 to accompany your 1099 forms and another to accompany your 3921 forms.

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Unlike some of the other tax forms you’ll have to file for your business, IRS Form 1096 is a little different. IRS Form 1096, officially known as the Annual Summary and Transmittal of U.S. Information Returns, is — as its official name implies — a summary document. It is submitted as an accompanying document with other IRS information forms, including forms 1097, 1098, 1099, 3921, 3922, 5498 and W-2G.

IRS Form 1096 only accompanies these information returns when they’re filed by mail. In essence, IRS Form 1096 functions like a fax cover sheet — it’s sent with your completed return to inform the IRS, in a glance, exactly what you’re submitting, so they can quickly and easily direct it to the appropriate next step.

Like the 1099 or W-2, you cannot simply print IRS Form 1096, fill it out and submit it with your respective information returns. Since the IRS processes paper forms by machine, you must purchase the correct version of Form 1096, either directly from the IRS or from a third-party retailer, like an office supply store. If you use small-business accounting software, like QuickBooks, or payroll software, your program may give you the ability to generate and print official versions of IRS Form 1096. If you don’t file the official version of Form 1096 and instead file the printed version from the IRS website, you may face a penalty.

A separate IRS Form 1096 will need to be submitted with each of the different types of information returns listed above, even if you only fill out one form. For example, if you’re filing 10 1099-MISC forms and one 1098 form, you’ll need to complete two 1096 tax forms — one to accompany the 1099-MISC forms and one to accompany the 1098 form.

You’ll only need to file IRS Form 1096 if you’re submitting your annual information returns to the IRS by mail. If you file these information forms electronically, either through the IRS FIRE System or a tax preparation software, you do not need to complete IRS Form 1096.

As a small-business owner, you would most likely need to file the 1096 tax form with Form 1099-MISC, which reports payments you’ve made throughout the year to independent contractors. However, it’s important to remember that the 1099 is not the only return that requires Form 1096 when you submit by mail. If you’re submitting any of the following forms by mail, you’ll also need to file IRS Form 1096:

• Form 1097: This form is used by issuers of certain tax credit bonds to report the distribution of their tax credits to the IRS as well as the credit recipients.

• Form 1098: This IRS form is used to report mortgage interest of $600 or more you’ve received during the year in the course of your business.

• Form 1099: On the whole, Form 1099 reports various types of miscellaneous income. It’s important to remember, however, although the 1099-MISC is probably the most well-known version of the 1099, there are 20 different versions of this form. Therefore, if you were filing 1099-MISC forms by mail, as well as a Form 1099-A, you would still need to complete a separate Form 1096 for each.

• Form 3921: This IRS form is used by corporations to report each transfer of stock to any person related to that person’s exercise of an incentive stock option.

• Form 3922: This form is used by corporations to report each transfer of the legal title of a share of stock acquired by an employee related to that employee’s exercise of an option granted under an employee stock purchase plan.

• Form 5498: This form is completed for each person for whom you maintained an IRA account.

• Form W-2G: This IRS form is used to report gambling winnings and any federal income tax withheld on those winnings.

If you’re filing 250 or more of any one type of information return, more than likely the 1099-MISC form, you have to file electronically and therefore, you would not have to complete IRS Form 1096. If you are required to file electronically and do not do so, you can face a penalty from the IRS.

If you’ve already filed one of the above information returns and need to make a correction, you’ll have to file a new copy of IRS Form 1096 with the corrected return as well.

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IRS Form 1096 only needs to be filed when you’re submitting one of the above information returns by mail.

A separate Form 1096 will need to be mailed to accompany each of the different versions of the above forms that you’re filing by February 28. However, if you’re filing the 1099-MISC form to report “NEC” or non-employee compensation — meaning you’re reporting payments your business has made to independent contractors — you’ll need to submit this form and the accompanying Form 1096 by January 31. Form 5498, on the other hand, must be submitted by June 1.

In order to correctly file IRS Form 1096, you’ll complete the form for each of your information returns (remembering that you must use an official version of Form 1096 and not print the PDF from the IRS website) and then group the forms by form number. The IRS recommends that if you’re filing Form 1099-MISC, you do so as a separate shipment. Additionally, if you’re filing 1099-MISC forms for payments you’ve made to contractors, even though you need to send Form 1096 to the IRS, you do not need to include this form when you provide your contractor with their 1099 copy.

The address that you mail your completed information returns and 1096 tax forms to will depend on your business’s location — so you’ll want to review the IRS Form 1096 PDF to ensure that you’re mailing to the correct IRS address. The IRS provides additional instructions with regard to filing paper returns in its overall 1099 instructions document, including specific information about staples, print type, etc., so you should also refer to these points, before mailing your returns.

Along these lines, the 1099 instructions document also lists exceptions for a handful of low-volume returns that can be filed with the printed-PDF version of Form 1096 from the IRS website. These returns are:

• 1097-BTC.

• 1098-C.

• 1098-MA.

• 1098-Q.

• 1099-CAP.

• 1099-H.

• 1099-LTC.

• 1099-Q.

• 1099-QA.

• 1099-SA.

• 3921.

• 5498-ESA.

• 5498-QA.

• 5498-SA.

If you’re submitting any of these IRS business forms, you can simply print the form and Form 1096 from the IRS website, fill them out and mail them to the correct IRS address based on your business location.

Although there are several nuances associated with who needs to file and how to file IRS Form 1096, the form itself is actually very simple.

Step 1: Complete your business’s information returns.

Before you can get started filling out IRS Form 1096, you’ll need to complete the necessary information returns for your business, whether that is your 1099-MISC forms or any of the other forms listed above. The information on these returns, as well as the number of returns and the different versions you’re submitting, will be relevant to completing Form 1096.

Once these forms are completed, you’ll know how many separate 1096 tax forms you’ll need to fill out. If you’re only submitting Form 1099-MISC, you’ll only need to complete one 1096 tax form. On the other hand, if you’re submitting Form 1099-MISC, Form 1098 and Form 3922, you’ll need to fill out a 1096 for each of these groups.

Step 2: Fill in the basic information at the top of IRS Form 1096.

For the sake of simplicity, assume you only need to complete one 1096 tax form. However, if you need to submit multiple versions of the form, you can easily repeat the following steps for each form.

Once you’re ready to begin filling out IRS Form 1096, you’ll start with the boxes in the upper left-hand corner.

In these boxes, you’ll fill in your name, street address, city, state, country and zip code. Underneath this section, you’ll also fill in your phone number, email address and fax number, as appropriate. In the box labeled “name of person to contact,” you might put your business accountant or tax advisor, if you’ve worked with them to complete these tax forms and would prefer the IRS contact them, if necessary.

Step 3: Complete box 1 or 2, plus box 3.

Next, you’ll continue down the form and fill in boxes 1 and 2. In box 1, you’ll enter your employer identification number, or EIN, if you have one. If you’re a sole proprietor and have an EIN, you’ll fill in this number in box 1 — if you don’t have an EIN, you’ll fill in your social security number in box 2. It’s important to note that you’ll complete either box 1 or 2, as it applies to you, not both. Therefore, even if you’re a sole proprietor who has an EIN as well as a personal social security number, you would only fill in your EIN in box 1.

You’ll want to ensure that the number you provide in this section matches the number you used on the information returns you completed.

In box 3, you’ll enter the number of forms you’re submitting with this 1096 tax form. If you’re submitting, for example, 10 separate 1099-MISC forms, you’ll write “10.” You’re entering the number of forms, not the number of pages — so even if you have 10 completed forms, but some of them have two pages, you’ll still only write “10” in box 3.

Step 4: Complete box 4 and 5.

Next, you’ll fill in box 4, which asks for “federal income tax withheld.” This number will be based on the information returns you’re filing with this Form 1096 — meaning you’ll add up any federal income tax withheld as indicated on those forms and write the total in this box. If you didn’t withhold any federal income tax, you’ll write “0.”

In box 5, you’re asked for the “total amount reported with this Form 1096.” This number will be specific to the type of information return you’re filing with your Form 1096. If you’re filing Form 1098-T, 1099-A or 1099-G you can leave this box blank. However, if you’re filing any of the other relevant information returns, you’ll enter the number that corresponds to a particular box on that form according to the instructions within the IRS Form 1096 PDF online (as listed below). If your form asks for a number from more than one box, you’ll add the numbers in those boxes together and fill in the total in box 5.

• Form W-2G: the number in box 1.

• Form 1097-BTC: the number in box 1.

• Form 1098: the numbers in boxes 1 and 6.

• Form 1098-C: the number in box 4c.

• Form 1098-E: the number in box 1.

• Form 1098-F: the number in box 1.

• Form 1098-Q: the number in box 4.

• Form 1099-B: the numbers in boxes 1d and 13.

• Form 1099-C: the number in box 2.

• Form 1099-CAP: the number in box 2.

• Form 1099-DIV: the numbers in boxes 1a, 2a, 3, 9, 10 and 11.

• Form 1099-INT: the number in boxes 1, 3, 8, 10, 11 and 13.

• Form 1099-K: the number in box 1a

• Form 1099-LS: the number in box 1.

• Form 1099-LTC: the number in boxes 1 and 2.

• Form 1099-MISC: the number in boxes 1, 2, 3, 5, 6, 7, 8, 10, 13 and 14.

• Form 1099-OID: the number in boxes 1, 2, 5, 6 and 8.

• Form 1099-PATR: the number in box 1, 2, 3 and 6.

• Form 1099-Q: the number in box 1.

• Form 1099-QA: the number in box 1.

• Form 1099-R: the number in box 1.

• Form 1099-S: the number in box 2.

• Form 1099-SA: the number in box 1.

• Form 1099-SB: the number in box 1 and 2.

• Form 3921: the number in boxes 3 and 4.

• Form 3922: the number in box 3, 4 and 5.

• Form 5498: the number in boxes 1, 2, 3, 4, 5, 8, 9, 10, 12b, 13a and 14a

• Form 5498-ESA: the number in boxes 1 and 2

• Form 5498-QA: the number in boxes 1 and 2

• Form 5498-SA: the number in box 1

Step 5: Complete box 6 and 7.

After you’ve completed box 5, you’ll move on to box 6. Box 6 will ask you to indicate which information return you’re submitting by marking an “x” in the corresponding space provided. Therefore, if you’re filing Form W-2G, you’ll mark an “x” in the first box in the row. It’s important to remember, you’ll only be marking one “x” within this space. If you’re filing multiple types of information returns, you’ll be completing a separate IRS Form 1096 for each of them.

Then, you’ll mark a check in box 7 if you’re filing this Form 1096 with 1099-MISC forms that report NEC, or non-employee compensation. NEC would apply to your business if you’re filing 1099-MISC forms to report payments you’ve made to independent contractors. If this is the case, you would check box 7; if not, you would leave it blank.

Step 6: Review Form 1096 and file with the IRS.

Once you’ve completed boxes 6 and 7, the main part of your Form 1096 is complete. Now, you’ll want to review the form to ensure that everything is correct and sign, date and provide your title at the bottom of the form.

Then you’ll be ready to package it with your corresponding information returns and file them with the IRS. You should organize these returns based on form number, with Form 1096 on top, separating each different type of return. Additionally, if you’re filing 1099-MISC forms, the IRS recommends that you mail these, with the 1096 tax form, separately from any other type of return.

Before mailing any returns, ensure that you’ve saved copies for your records, in case you need them at a future date for financial planning or a business audit. After you’ve made your own copies, you can mail the original versions to your designated IRS address, shipping the forms in a flat mailer. The due date for most of these returns is February 28, with the exception for Form 1099-MISC to report NEC, which has a deadline of January 31, and Form 5498, which has a deadline of June 1. The IRS will consider the deadline met as long as the form is properly addressed and mailed on or before the due date.

The Form 1096 instructions aren’t too complicated — as a summary document, it’s not too difficult to complete this tax form. Nevertheless, there are still certain actions you can take to make this particular tax process easier.

File electronically

The first tip to streamline your tax processes, including information and other tax returns, is to file electronically. If you file your information returns through the FIRE system, you won’t have to worry about Form 1096 at all, as it only applies to mailed returns; the relevant information it provides is incorporated into the online system process. Additionally, by filing electronically, you’ll save time, effort, money and hopefully have your returns processed faster with fewer errors.

Although you may be hesitant to take your tax processes online, especially if you have a smaller business, the benefits certainly outweigh the hassle involved with manually completing tax forms and mailing them to the IRS.

If you decide to file electronically, you can easily opt to outsource your tax processes to a software, service provider or other tax professional to either work with you or completely file on your behalf. Even though you’ll have to pay any associated costs to work with those services or professionals, you’ll have much greater peace of mind with regard to your tax forms, and you’ll have time to invest in other parts of your business operations.

Invest in accounting or payroll software

Whether you decide to file electronically or by mail, it’s always worth investing in an accounting or payroll software. With either of these software products, you’ll be able to automate your processes, and you’ll have quick access to the information you’ll need to complete your business taxes.

Utilizing one of these types of software will make it easier to work with any business accountant, advisor or a tax professional. Moreover, many software systems can either provide you with the official version of IRS forms, like Form 1096, that you’ll need to complete, or they can allow you to complete the entire process online through their platform. For example, if you use QuickBooks for your accounting software, you can utilize the Intuit 1099 e-file service — which imports the relevant information from your accounting platform, generates 1099 forms and allows you to file them with the IRS online.

Work with a professional

Whether you file electronically or by mail, it’s always worthwhile to work with or consult a business tax professional, like a CPA or enrolled agent. Business taxes are complicated and extremely involved. Taking the 1096 tax form as an example, there are many specifics, restrictions and best practices associated with filing this one form.

By working with a tax professional, you’ll have an expert to consult who will know the ins and outs of these forms and who will be able to answer your questions and ensure that you’re completing all the forms you need to — and that you’re doing so correctly and on-time. Just as is the case with accounting or payroll software, you’ll have to pay a professional for their services; however, hopefully by investing in their expertise, you’ll avoid additional time and hassle (as well as IRS fines) that you might have experienced otherwise.

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