The form 1096 is a "recap/summary" form that tell the IRS how many copies of forms you are sending to them and what type of form (check the box 1099misc, 1099Int, 1099DIV, etc). It is required as you can't expect the IRS to do any work tallying your forms!

You are required to report to IRS any amount paid a worker if the total is $600 or more (year to date). If your total payment is under $600 you do not have to report it (but you can report it if greater than $1 ) but it is still income to the worker and he must report it and pay tax on even one dollar.

You send one copy of the 1099misc to the worker and one copy to the IRS. Some states also want a copy sent to them. As a result of filing with the IRS you get to deduct the worker payments. An individual worker is required to report the 1099misc amount as income (even if only a dollar) on form 1040 Sch-C and if the "net profit" on Sch-C is more than $400 the worker also computes self-employment tax (15.2%) on 1040 Sch-SE.