A step-by-step guide for independent contractors.
If you are unfamiliar with Form 1096, it's time to learn what it is.
Our informative guide will examine the best practices for completing the 1096 Form from start to finish.
Let's begin!
“The IRS Form 1096, officially known as the Annual Summary and Transmittal of U.S. Information Returns, plays a crucial role during tax time in America. It summarizes all accompanying paperwork, including several other forms.”
Taxpayers submit Form 1096 and the remaining tax return forms when filing by mail. The taxpayer submits a fax cover sheet, which allows officials to quickly review all enclosed forms and send them to the appropriate department.
You have two options for obtaining Form 1096:
Important Consideration: It takes the department eight to ten days to receive the Form and proceed.
In the following section, we will continue with more details about who issued it and who needs to file it.
The Internal Revenue Service (IRS) issues Form 1096, the “Annual Summary and Transmittal” of US Information Returns. It is a summary page for various IRS tax forms, similar to Form 1099.
When filing electronically, you do not need to submit Form 1096 or send it to your contractors. This requirement only applies if you are filing a paper return.
When hiring a US-based contractor to create your business website, issue them Form 1099 and send a copy to the IRS. If filing by mail, also include Form 1096.
Please note that contractors not subject to US taxes do not need to file Form 1099 or 1096. However, it is mandatory for contractors – including US contractors living abroad – to file 1099 (and, if applicable, form 1096). If you want to know about hiring in US, contact us.
Businesses must submit Form 1096 when they hire contractors; however, contractors can file their taxes without submitting the form.
If you have questions, Do I need Form 1096 if I'm e-filing?
You don't need to submit Form 1096 if you're filing everything “electronically.” You only require it if you're submitting your documentation by mail.
Therefore, we should focus on the most critical point: "filling out Form 1096." In the next part, we will lead you through filling out this form. Prepare to roll up your sleeves and tackle Form 1096!
Form 1096 is straightforward to fill out.
From completing your business information to filing Form 1096, let’s walk through every step with the specific details.
To complete Form 1096, it's necessary to "finish every detail of your company information," which includes the firm name, address, and number of returns to be filed.
You need to “complete your personal information”; including the following:
Note: There's also a box for adding the contact details of your company's accountant.
If you have an “Employer Identification Number (EIN)”; enter it in Box 1; otherwise, enter your Social Security number in "Box 2".
Understanding these critical stages is vital for completing a hassle-free form. Continue reading the next steps.
When submitting forms to the IRS; indicate the “number of forms you plan to submit.” For instance, if you intend to file six 1099-MISC forms, write "6" in "Box 3."
To calculate the total federal income tax withheld from all your forms; record this sum in "Box 4."
To complete Form 1096, “mark the return you will file in Box 6 using an X”; indicates the information return that will be forwarded to the IRS.
Here are some of the forms that require an accompanying Form 1096 (if you're filing by mail):
Finally, file the Form with the IRS using the provided address. Double-check that all entered information is correct before filing, and remember to “make copies for your business records.”
They must include Form 1096; when filing by mail–resulting in a $50 late filing penalty per form. If the forms are not filed within 30 days, this increases to $110 per form. After August 1, the penalty is raised to $260 per form.
The penalty is $350 per form for the intentional failure to file.
GlobalExpansion's Contractor Management platform simplifies everything. It enables you to onboard, manage, and pay your contractors in one place — and we will help you fill out Form 1099 for your US contractors. We will also assist you with:
Filing taxes is quite challenging; whether you're working with US-based or international contractors. If you are a US-based company collaborating with contractors and filing by mail, understanding the requirements of Form 1096 is crucial. This guide will help you file the proper forms on time– and avoid costly penalties for late or incorrect filings.
Companies must file Form 1096 (and all accompanying forms) by “February 28” following each tax year. However, if they are liable to file the 1099-MISC Form, it must be filed—along with Form 1096—by January 31.
FYI:
The employer or taxpayer must always submit Form 1096 on time via mail. Employees and contractors must not submit this form when filing their income returns. It is the employer or taxpayer's responsibility to ensure timely submission of Form 1096 through the mail, while employees and contractors can handle this form when filing their income returns.
Do you have more questions about managing your contractors? Let us know! We're here to help you grow your global team. We are a global HR service provider and can help you manage your related tasks hassle-free.
The IRS states that businesses filing 1099s online do not need to submit Form 1096, which is only for physical forms and cannot be submitted online. If e-filing other forms associated with the 1096, use the IRS's FIRE system.
Tax filing can be messy and complex at the best of times. Still, employing multiple contractors working remotely in different locations makes making a potentially costly mistake easy.
To ensure compliance forms 1096 and 1099-NEC; should be submitted together and reach the IRS by January 31 each year.
The due date to submit forms 1097, 1098, 3921, 3922, or W-2G with the 1096 is March 31. Please ensure they are submitted by this date.
The deadline to submit all other forms on paper is February 28, and for e-filing, it is March 31.
Are you looking for global payroll solutions?
Who is the Global Expansion?
Global Expansion is a worldwide payroll service, that improves the payroll process by centralizing all data and offering a single point of contact, simplifying data pulls and reviews. We save you time and money by eliminating the need for various payroll suppliers and platforms.
We can assist you with our unified payroll platform and endless locations. With our services, you can pay your employees in local currency, comply with local tax rules, and make payments on time every time.
Access to employee benefit programs.
Recruit and retain great talent with us.
Let’s connect now!