Information Return

An information return is a form a payer files with the IRS to report certain payments it made during the calendar year, while furnishing a matching copy to the person who received the payment. It is not a tax return that computes the payer’s own tax. It is a report that tells the IRS, and the recipient, that a payment happened. The IRS describes the obligation plainly on its information returns page: when an entity pays recipients, it “must provide statements to them and report the transactions to the IRS.” The IRS General Instructions for Certain Information Returns cover the main families.

Common Information Returns

The information return you file depends on what you paid and to whom.

• Form 1099-NEC reports nonemployee compensation, the form a US business issues to a US contractor.
• Form 1099-MISC reports miscellaneous income such as rents, prizes, and certain other payments.
• Form 1099-K reports payments settled through payment cards and third-party networks.
• Form W-2 reports wages, tax, and withholding for employees.
• Form 1042-S reports US-source income paid to a foreign person, alongside any tax withheld.

A US person who is paid as a contractor receives a 1099-NEC. A foreign person paid US-source income receives a 1042-S instead, never a 1099.

The Payer’s Obligation

A payer carries two distinct duties for each information return: file the copy with the IRS, and furnish a statement to the recipient. The IRS enforces these separately. Per the General Instructions, a payer that fails to meet either duty “may be subject to a penalty,” with section 6721 covering failure to file correct information returns by the due date and section 6722 covering failure to furnish correct payee statements. Getting the recipient’s name and taxpayer identification number right matters, because a mismatch can trigger backup withholding and penalty exposure.

Form 1096, the Paper Transmittal

When a payer files information returns on paper, it does not mail loose forms. It attaches a Form 1096 transmittal. The IRS states on its About Form 1096 page that the form is used to “transmit paper Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G to the Internal Revenue Service.” Form 1096 is paper only. The form itself instructs filers, “Do not use this form to transmit electronically.” Note that Form 1042-S is not in the 1096 list. It is transmitted with Form 1042 to a different address.

Electronic Filing Threshold

Most filers no longer touch Form 1096, because the e-file threshold is low. The IRS e-file information returns page states that “as of tax year 2023, if you have 10 or more information returns, you must file them electronically,” and that this includes Forms W-2. According to IRS Topic no. 801, this “10-return threshold is comprised of an aggregate of almost all information return types covered by the regulation,” so the count combines form types rather than counting each form on its own. A payer with a handful of 1099s and a few W-2s can cross the threshold and must e-file. Electronic filing uses the IRS systems, not a paper Form 1096.

Related Forms and Terms

• Form 1099-NEC: the information return for US contractor pay.
• Form 1042-S: the information return for US-source income paid to foreign persons.
• Form 1096: the annual summary and transmittal for paper information returns.

Omnivoo Contract Management classifies each payee, collects the right taxpayer documentation, and produces the correct information return records, so a payer files the right form with the IRS and furnishes the right statement to each recipient at year-end.