Form 1096: a guide for US employers

Are you working with independent contractors that are subject to U.S. taxes? If so, you may be familiar with Form 1099, which is used to report non-wage income to the IRS.

However, you might not be aware of Form 1096 – a summary IRS form that acts as a cover sheet for other forms you’re filing, including Form 1099.

In this guide, we'll explain the purpose of Form 1096 and which businesses need to file it, what happens if you fail to include it, and where you can find 1096 forms for free.

So, let's jump right in.

What is Form 1096? 

Form 1096 is the Annual Summary and Transmittal of US Information Returns issued by the Internal Revenue Service (IRS). 

Business owners use this form to submit information returns to the IRS. It serves as a cover sheet to report the totals from forms such as 1099, 1098, and W-2G, which detail various types of non-employee income, deductions, and financial transactions not covered by the standard W-2 form.

The intent of Form 1096 is to compile and report the aggregate information of all these individual forms that are submitted to the IRS in a single package. This makes it easier for the IRS to process and verify the submitted information. 

In a nutshell, this type of form is essential for CFOs and finance managers to ensure compliance with US tax laws and the accurate reporting of financial transactions.

Who needs to file Form 1096? 

Form 1096 must be filed by businesses, including corporations, partnerships, individuals, estates, and trusts. These entities are required to file certain types of information returns with the IRS.

Specifically, Form 1096 is necessary for those who submit returns by mail of the following forms to the IRS: 1099 (miscellaneous income), 1098 (mortgage interest statement), 3921 (exercise of an incentive stock option), 3922 (transfer of stock acquired through an employee stock purchase plan), 5498 (IRA contribution information), and W-2G (gambling winnings). 

Essentially, if a business issues any of these forms in paper format to report transactions or financial activities as required by tax laws, a Form 1096 needs to accompany that batch of documents to summarize and transmit them to the IRS.

Do I need Form 1096 if I’m e-filing?

No. There’s no need to submit Form 1096 if you’re filing everything electronically since the electronic filing system automatically compiles and transmits the summary information to the IRS.

Form 1096 is only required if you’re submitting your documentation by mail.

How to submit Form 1096 for independent contractors 

Unlike a 1099 form, you don't need to send 1096s to your contractors. As the business hiring the contractor, it is your responsibility to submit the 1096 form. Contractors do not need Form 1096 when submitting their taxes.

For example, say your business hires a US-based contractor to create a website. You would need to issue them a Form 1099 and send a copy of it to the IRS. If you were filing by mail, you’d also need to send a Form 1096 to the IRS.

Keep in mind that it’s not necessary to file Form 1099 or 1096 for contractors who aren’t subject to US taxes. But for contractors who are — including US contractors living abroad — the 1099 (and, if you’re filing on paper, 1096) is mandatory.

Can I get 1096 forms for free? 

Yes, form 1096 is available as a free download on the IRS website. 

However, while you can download and print Form 1096 for informational or preparation purposes, the IRS requires the submission of the original, scannable form for paper filing. 

This means that, for official submissions, you should use a version of Form 1096 that is IRS-approved for scanning. The downloadable version from the IRS website may not be scannable and, therefore, may not be accepted as a paper submission.

To get Form 1096, you can place your order through the IRS website or call 1-800-829-3676. You can expect to receive the form within 10 days.

Other ways to obtain this form are through tax software and professional tax preparation services.

Paid 1096 Forms

An alternative to free 1096 forms is using the services of businesses that sell these forms for a small per-document fee or a subscription to an electronic file-filling platform. These companies provide versions that are IRS-approved for scanning so that you can be assured of their compliance and acceptance when you submit them to the IRS.

For example, QuickBooks offers a paid version of Form 1096 that can be filled in directly from its accounting software. And pdfFiller provides a subscription-based version that you can fill in electronically online, save as a PDF, email to yourself, or save in the cloud.   

There are some advantages to purchasing forms from a provider. These platforms often come with integrated software solutions that simplify the tax preparation and filing process. This software can automatically fill out forms based on the financial data already in the system, reducing manual entry errors and saving time.

Users of these systems often gain access to customer support, guidance, and resources to help them correctly fill out and file forms. This can be especially beneficial for businesses that don’t have a dedicated tax professional on staff.

Purchasing from a commercial provider, including the latest updates and requirements from the IRS, can be a one-stop solution for your tax preparation needs. In doing so, you can trust that your company is using the correct forms for the appropriate tax year.

How to complete Form 1096

Form 1096 is fairly straightforward to fill out. Here’s how to do it:

Step 1: Fill in your business information

The first step in completing Form 1096 is to fill in all of your business information, including your company name, address, and the number of returns your business needs to file.

Step 2: Fill in your personal details

Next, fill in your personal information, including the following:

• Full name

• Phone number

• Email address

• Fax number

• Mailing address

• City

• State

• Country

• Zip code

There’s also a box for adding the contact details of your company’s accountant.

Step 3: Enter your EIN in Box 1

If you have one, include your Employer Identification Number (EIN) in Box 1. If you don’t have an EIN, include your Social Security number in Box 2 instead.

Step 4: Enter the number of forms in Box 3

Specify the number of forms you plan to submit to the IRS. For example, if you’re planning to file five 1099-MISC forms, write down “5” in Box 3.

Step 5: Calculate your withheld federal income tax in Box 4

Calculate the combined withheld federal income tax from all the forms you’re filing, and record this total in Box 4.

Step 6: Indicate which return you’re submitting in Box 6

One of the last steps in completing Form 1096 is to indicate which return you’ll be filing in Box 6. Use an X to mark the information return that you're submitting to the IRS.

Here are some of the forms that require an accompanying Form 1096 (if you’re filing by mail):

• Forms W-2G

• Form 1098

• Form 1098-C

• Form 1098-E

• Form 1099-B

• Form 1099-C

• Form 1099-CAP

Step 7: File Form 1096 with the IRS

Finally, file the form with the IRS using the address provided. Make sure that all the information you entered is correct before filing, and make copies for your business records.

What’s the deadline for filing Form 1096?

Companies must file Form 1096 (and all accompanying forms) by the February 28 that follows each tax year. However, if you’re liable to file the 1099-MISC form, then you’ll need to file it — along with Form 1096 — by January 31.

What happens if you don’t submit Form 1096?

If you file by mail and don’t file Form 1096, you will need to pay a late filing penalty of $60 per form. If, after 30 days, you still haven't filed, this increases to $120 per form. After August 1, the penalty is $310 per form.

In the case of intentional failure to file, the penalty is $630 per form.

How to simplify tax filing for your contractors

Tax filing can be messy and complex at the best of times, but if you have multiple contractors working remotely in different locations, it can be easy to make a potentially costly mistake.

Our Contractor Management Platform simplifies everything. It enables you to onboard, manage, and pay your contractors in one place — and we can help you fill out Form 1099 for your US contractors, too. We can also help you:

• Create and edit locally compliant contractor agreements

• Receive and pay invoices in one click

• Make payments in over 70 currencies in 180+ countries

To see how Contractor Management can make your life easier, take a quick tour now — or sign up for a free 30-day trial.

Always stay compliant (whether at home or abroad)

Taxes are complicated, whether you're working with US-based or international contractors.

Understanding the Form 1096 requirements is important if you are a US-based company collaborating with contractors and filing by mail. The information in this guide will help you file the right forms on time and ensure you avoid costly penalties.

Remote is a global HR platform that helps businesses hire, manage, and pay their employees and independent contractors, both domestically and abroad. If you’re looking to streamline your contractor management, sign up with Remote for locally compliant contract templates at just $29 per contractor per month, with no hidden fees.

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