If you or your business has not made the transition to filing taxes electronically, there is no time like the present. If you are still not convinced, it is quite possible that the prospect of filling out a stack of 1096 forms might tip the scale. However, if you still do not feel ready or you work for a small business, it is important to know when you need to file a 1096 form. You should also make note of any recent changes to the form in the last few years.
What is a 1096 Form?
If you filed a 2018 1096 form, you should already know its purpose. A 1096 form is used when you transmit paper forms to the Internal Revenue Service. These forms include Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. If you choose to file electronically this year, you do not need to file any 1096 forms. The Form 1096 is essentially a cover sheet for the other forms and are only required for physical tax filings.
There are some people who are required to electronically file information returns. For instance, if you must file 250 or more information returns of any one type, you must electronically file the returns. If you are reporting back taxes with a 2018 1096, but do not have an approved waiver to report physical copies, you may encounter a penalty.
There are few notable changes over the last few years to Form 1096. The most recent change in January 2021 is the zip code correction made to the Austin Submission Processing Center mailing address. Otherwise, the most notable related change is the re-introduction in 2020 of the 1099-NEC.
The Form 1099-NEC is used by businesses or trades to report non-employee compensation if the amount reaches or exceeds $600 for the year. Therefore, if you filed a Form 1099-MISC in 2018 for non-employee compensation with an accompanying 2018 1096 form, you will need to make that switch moving forward.
Why You Should Electronically Report Income
While it was possibly practical to file your 1096 forms in 2018, reporting income today is done with greater frequency online. Even as a small business, a strong accounting software tool is what can transform a small business into one with better and more efficient filing practices. If you are still apprehensive, Advanced Micro Solutions helps seamlessly bridge that gap. Their tax software offers a choice between two filing methods. The first method is E-File Direct and the second option is E-File Services.
Advanced Micro Solutions also allows you to create software generated forms. Whether you need to submit a W2 or 1099 form, there is no repetitive data input. Similarly, any data will be automatically saved through the software when a new record or form is accessed. You will not need to worry about losing forms or data due to disorganization. So, even though you possibly filed 2018 1096 forms, the time saved by eliminating filing 1096 forms altogether can ultimately be tremendous.