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Form 1096, Form 1099 Defined


Purpose of Form / Who Must File

File Form 1096 (Annual Summary and Transmittal of US Information Returns) to transmit paper Forms 1098, 1099, 5498, and W-2G to the Internal Revenue Service.

File Form 1098 (Mortgage Interest Statement) to report mortgage interest, including points, of $600 or more received by you, in the normal course of your trade or business, from an individual (including a sole proprietor). You are not required to file Form 1098 if the interest is not received in the normal course of your trade or business. The $600 threshold applies to each mortgage.

File Form 1099-A (Acquisition or Abandonment of Secured Property) for each borrower if you lend money in connection with your trade or business and, in full or partial satisfaction of the debt, you acquire an interest in property that is security for the debt, or you have reason to know that the property has been abandoned. You need not be in the business of lending money to be subject to this reporting requirement.

File Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) for each person:

  1. for whom you, doing business as a broker or barter exchange, have sold stocks, bonds, commodities, regulated futures contracts, foreign currency contracts, forward contracts, and debt instruments, or
  2. who exchanged property or services through the barter exchange.

File Form 1099-C (Cancellation of Debt) for each debtor for which you cancelled or discharged a debt or indebtedness owed to you of $600 or more and you are a financial institution, credit union, federal government agency, or regulated subsidiary thereof.

File Form 1099-DIV (Dividends and Distributions) for each person:

  1. to whom you have paid gross dividends and other distributions on stock of $10 or more,
  2. for whom you have withheld and paid any foreign tax on dividends and other distributions on stock,
  3. for whom you have withheld any federal income tax under the backup withholding rules, or
  4. to whom you paid $600 or more as part of a liquidation.

File Form 1099-G (Certain Government Payments) if you have made certain payments (unemployment compensation, refunds of state or local income tax, taxable grants, agricultural subsidies) as a unit of a federal, state, or local government.

File Form 1099-INT (Interest Income) for each person:

  1. to whom you paid interest of at least $10 (except for the $600 limit for interest paid in the course of your trade or business),
  2. for whom you withheld and paid any foreign tax on interest, or
  3. from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

File Form 1099-MISC (Miscellaneous Income) for each person to whom you have paid:

  1. at least $10 in royalties or broker payments in lieu of dividends or tax exempt interest,
  2. at least $600 in rents, services, prizes and awards, other income payments, and medical and health care payments,
  3. any fishing boat proceeds,
  4. direct sales of at least $5,000 of consumer products to a buyer for resale,
  5. accrued wages, vacation pay, and other compensation paid to an estate or beneficiary after the date of death of a deceased employee,
  6. at least $600 in remuneration to independent contractors,
  7. at least $600 in remuneration to directors, or
  8. from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

File Form 1099-OID (Original Issue Discount) if the original issue discount (OID) includible in gross income is at least $10 and you are:

  1. an issuer with any bond outstanding or other evidence of indebtedness in registered or bearer form issued with OID,
  2. an issuer of certificates of deposit made, purchased, or renewed after 1970 if the term of the obligation or deposit is more than one year
  3. a financial institution having other deposit arrangements having a term in excess of one year provided the payment of interest is deferred until maturity,
  4. a broker or other middleman holding an OID obligation as nominee for the actual owner, or
  5. a real estate mortgage investment conduit or issuer of a collateralized debt obligation.

File Form 1099-PATR (Taxable Distributions Received From Cooperatives) for each person to whom the cooperative has paid at least $10 in patronage dividends and other distributions or from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

File Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, Etc.) for each person to whom you have made any designated distribution from profit sharing or retirement plans, IRAs, annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, and charitable gift annuities whether or not you withheld federal income tax.

File Form 1099-S (Proceeds From Real Estate Transactions) to report the sale or exchange of real estate.

File Form 5498 (Individual Retirement Arrangement Information) for each person for whom you; maintained an individual retirement arrangement (IRA) or simplified employee pension (SEP).

File Form W-2G (Certain Gambling Winnings) to winners if the amount paid, reduced (at the option of the payer) by the amount of the wager is $600 or more and at least 300 times the amount of the wager. File Form W-2G to winners at keno if the amount paid, reduced by the amount of the wager, is $1,500 or more. File Form W-2G to winners at bingo and slot machines if the amount paid, reduced by the amount of the wager, is $1,200 or more.

Magnetic Media / Electronic Reporting

If you are required to file 250 or more information returns, you must file on magnetic media. The 250 or more requirement applies separately to each type of form. File Form 4419 (Application for Filing Information Returns Magnetically / Electronically), at least thirty days before the due date of the return, to obtain approval. Use Form 4804 (Transmittal of Information Returns Reported Magnetically / Electronically), instead of Form 1096, to transmit magnetic media information returns.

Penalties

Penalties apply if you fail to file information returns in a timely manner, or if you fail to include all information required to be shown on a return, or if you include incorrect information on a return. Penalties also apply if you file on paper when you were required to file on magnetic media, if you report an incorrect taxpayer identification number, if you fail to report a taxpayer identification number, or if you file to file paper forms that are machine-readable.

When to File

Provide recipients with 2008 Forms 1098, 1099, 5498, and W-2G by January 31, 2009. File 2008 Form 1096 with Forms 1098, 1099, and W-2G by February 28, 2009. File 2008 Form 1096 with Form 5498 by May 31, 2009. 

Where to File 

 
TAX TIDBIT ...To correctly calculate withholding near wage base limits, enter your Gross Salary Year-to-date. It's important for an accurate calculation and is usually found on your last pay stub.