Tax Day is approaching, and getting all the papers ready is a strenuous task. Filling in several forms, mailing them to the correct address, and preparing the files might take you more than a month to get through, especially if you own a small business in the U.S.
IRS Form 1096 is a potent document that legitimate companies file every year concerning the transactions they undertake. However, it isn’t as easy as filing other forms to the IRS since the process is lengthier and requires more technicality than filling a form.
For easy understanding, this article has been divided into the following sections:
- IRS Form 1096: What Does It Do?
- IRS Form 1096: Which Forms Does it Accompany?
- IRS Form 1096: Who Needs to File it?
- IRS Form 1096: Where to Find it?
- IRS Form 1096: Where to Mail it?
- IRS Form 1096: How to File it?
- IRS Form 1096: Filling out the Details
IRS Form 1096: What Does It Do?
IRS Form 1096, formally termed as “Annual Summary and Transmittal of U.S. Information Returns,” is a transmittal tax form that contains a summary of all forms that a company files to the IRS signifying their transactions throughout the year.
Form 1096 is an accompanying document that companies file with other files out of the following seven if they apply to their records:
- Form 1097
- Form 1098
- Form 1099
- Form 3921
- Form 3922
- Form 5498
- Form W-2G
Form 1096 only accompanies these forms if they are sent by mail. In case these are sent electronically, there is no need to fill out form 1096. Much like a fax cover sheet, form 1096 tells the IRS what returns you have completed by giving a summary of the forms mentioned above (whichever is applicable).
IRS Form 1096: Which Forms Does it Accompany?
Form 1097
This form deals with the distribution of tax credit bonds by a company in a financial year. Through this form, the company informs the IRS about the amount dispersed as tax credits to the IRS as well as other credit recipients.
Form 1098
Form 1098 is everything related to mortgage interests. Specifically, if you received $600 or more of the mortgage during the whole year of your business, you need to inform the IRS about it through this form.
Form 3921
Corporations use this form to inform the IRS about stock transfers to a person who is liable to use their stock options. So, if a person has the right to extract money from your business stocks, this is informed to the IRS through form 3921.
Form 3922
Form 3922 relates to employee stock benefits. Under an employee stock purchase plan, this refers to the transfer of a legal title of a stock share used by an employee. Companies need to inform the IRS about such details through form 3922.
Form 5498
If your company has maintained an IRA or an Individual Retirement Account for a person, you need to inform the IRS about this by filling out form 5498
Form W-2G
This form relates to information on your business about gamble wins and any federal income taxes( that need to be paid to the government) withheld on that account. Failure to mention such taxes that are withheld by your company will result in grave penalties. Form W-2G is important to file to the IRS on this account.
IRS Form 1096: Who Needs to File it?
Every company that qualifies under the aforementioned forms as part of their transactional process has to file Form 1096. However, if you file your payment return information to the IRS via electronic methods, through tax preparation software, you don’t need to go through the trouble of filling out and sending this form.
On a side note, if you are running a small business, along with the form 1096, you must send out a 1099-MISC form. Let us talk about this more:
Form 1099 is a form that contains information on all the payments you have made to independent contractors who are associated with your business. This includes all the miscellaneous payments your small business made to independent contractors who are not employees in your business. You need to provide this information to the IRS by filling out and sending them Form 1099-MISC along with details in form 1096.
If you have more than 250 payment returns to file, you should do it electronically, and in that way, you don’t have to fill out form 1096. However, if it is anything less than 250, rest assured you must complete form 1096 along with the forms you send to the IRS. In case the IRS expects you to send a certain form electronically and you don’t follow the order, you are bound to face penalties.
In case you have made a mistake on the file you sent via mail, do not fret. All you need to do is mention the corrections on a new form along with another form 1096 that contains the summary.
IRS Form 1096: Where to Find it?
No. there is no website through which you can download form 1096 and use that to mail the IRS. Instead, you need to order form 1096 by purchasing it online.
This is because the IRS needs scannable form 1906 to pass its validity. If you just download it from the internet and send it, the IRS will view it as a printed copy. They need an original document, and for this discrepancy, you may face penalties.
You can order form 1096 from here. Make sure you order the correct number of copies that you need to send depending on the number of forms you will send to the IRS. For every form that you send out of the 7 mentioned above, you must attach a Form 1906 with it.
IRS Form 1096: Where to Mail it?
Now that you know where you can find the IRS file, you must be confused as to where you need to mail it. There is no one set address for the same. The mailing address for form 1096 is different for different states.
The page on Where to File Form 1096 is an official government website that provides you with all the different mail addresses where you need to send your form 1096, containing the summaries along with other applicable forms.
The state-specific addresses are also present on Page 3 of form 1096.
IRS Form 1096: How to File it?
Remember, an IRS form 1096 should only be filed in case you are filing the above-mentioned forms through the mail and not apply to the forms you send out electronically.
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.- end deadlines.
The first thing you need to do is file all your return payment form information correctly step-by-step. If you make one mistake, you have to purchase another form and send it the same way, which is a waste of money. So try to get it right the first time.
After filling up all the necessary forms, start grouping all of them. Again, remember to use the official document by ordering it, rather than downloading a copy from the internet. The IRS requires a scannable form 1096.
It also recommends that you should make all form 1096-MISC in a separate shipment. The IRS also stresses the correctness of your business address. This means that the address through which you send form 1096 and others must correspond to the exact address mentioned in the IRS pdfs both for form 1096 and 1099.
There are a few accepted forms you can file in the printed-PDF version of Form 1096 from the IRS website. These do not have to be the original version ordered online. 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
IRS Form 1096: Filling out the Details
Step 1: Fill out your return details on the necessary forms
Fill out all the necessary details asked in the forms you will send to the IRS along with form 1096.
If you are filing out only form 1099-MISC, you need one form of 1096 to go with it. On the other hand, if you are filling out more such forms such as 1097, 1098, 3921, 3922, 5498, or W-2G, you need to send a form 1096 with each of these.
Step 2: Fill out the Top of the IRS Form 1096
Begin by filling up the boxes in the upper left-hand corner of form 1096. Fill in your personal requirements, and then under the ‘name of the person to contact.’ enter the name of your accountant or tax advisor.
Step 3: Fill in box 1 or 2 along with box 3.
In box 1, you need to fill in your EIN number. If you don’t have one, proceed to box 2, where you will have to enter your social security number. Fill either one of the boxes that apply to you, NOT BOTH.
Box 3 should contain the number of forms you are submitting with form 1096. Mention the number of forms and not the number of pages.
Step 4: Fill in boxes 4 and 5
Box 4 deals with the section on any federal taxes that were withheld by your business or if they won any gambling money. If none of this applies to you, put ‘0’ in the box.
Box 5 asks for the “total amount reported with this Form 1096.” Following are the forms that need to be put in boxes after box 5 if these apply to you:
- Form W-2G: box 1
- Form 1097-BTC: box 1
- Form 1098: boxes 1 and 6
- Form 1098-C: box 4c
- Form 1098-E: box 1
- Form 1098-F: box 1
- Form 1098-Q: box 4
- Form 1099-B: boxes 1d and 13
- Form 1099-C: box 2
- Form 1099-CAP: box 2
- Form 1099-DIV: boxes 1a, 2a, 3, 9, 10, and 11
- Form 1099-INT: boxes 1, 3, 8, 10, 11, and 13
- Form 1099-K: box 1a
- Form 1099-LS: box 1
- Form 1099-LTC: boxes 1 and 2
- Form 1099-MISC: boxes 1, 2, 3, 5, 6, 7, 8, 10, 13 and 14
- Form 1099-OID: boxes 1, 2, 5, 6, and 8
- Form 1099-PATR: boxes 1, 2, 3, and 6
- Form 1099-Q: box 1
- Form 1099-QA: box1
- Form 1099-R: box 1
- Form 1099-S: box 2
- Form 1099-S: box 1
- Form 1099-SB: boxes 1 and 2
- Form 3921: boxes 3 and 4
- Form 3922: boxes 3, 4, and 5
- Form 5498:boxes 1, 2, 3, 4, 5, 8, 9, 10, 12b, 13a and 14a
- Form 5498-ESA: boxes 1 and 2
- Form 5498-QA: boxes 1 and 2
- Form 5498-SA: box 1
Step 5: Fill out boxes 6 and 7
Box 6 is simple to follow. You have to mark an “x” on the form you are summarizing in form 1096 and send it to the IRS.
Mark a “check” in box 7 if you file a form 1099-MISC along with form 1096.
Step 6: Review and Mail
Once all the details a filled in, make sure to cross-check all the details and then send it.
Conclusion
With all the details filled in, ensure you send form 1096 along with others before the deadline of February 28, 2022. March 1 is the deadline to submit form 1096 via mail, and March 31 is the deadline to submit electronically.
Follow the above-mentioned rules to ensure your business remains afloat and you clear off the necessary taxes on time.
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Key Takeaways
- IRS Form 1096, formally termed as “Annual Summary and Transmittal of U.S. Information Returns,” is a transmittal tax form that contains a summary of all forms that a company files to the IRS signifying their transactions throughout the year
- If you are running a small business, along with the form 1096, you must send out a 1099-MISC form
- If you have more than 250 payment returns to file, you should do it electronically, and in that way, you don’t have to fill out form 1096
- You need to order form 1096 by purchasing it online
- With all the details filled in, ensure you send form 1096 along with others before the deadline of February 28, 2022. March 1 is the deadline to submit form 1096 via mail, and March 31 is the deadline to submit electronically
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