Think of an IRS tax transcript as your tax return’s “cheat sheet.” It’s not the full return, but a summary that lenders, auditors, or even investigators may look at when making decisions about you. Knowing what’s in it—and how to use it—can make all the difference.
When you file a tax return, the Internal Revenue Service (IRS) securely maintains the information provided on that return. Transcripts are not copies of tax returns, but summaries of the information contained in them.
A tax transcript displays identifying information that is masked, along with a summary of the money amounts referenced on your return. According to the IRS, this includes what you have reported for income, wages, penalties, interest and any tax liability owed.
How can you use a tax transcript?
Obtaining a transcript can be helpful if you are contesting a penalty, preparing for a tax audit, or amending or filing a past or unfiled return. If you are challenged with allegations of tax fraud or an IRS criminal investigation, a transcript can help you quickly identify what you reported and when you. Transcripts may also be requested by lenders when applying for loans, or when applying for student aid, such as a Free Application for Federal Student Aid (FAFSA) application. When you need a summary of your financials, a tax transcript is a good place to start if you do not have a copy of your return.
Types of tax transcripts
You can request several types of transcripts.
- Tax account: A tax account transcript shows filing status, income, payment types and other information. It is usually available through an online account for the prior nine years.
- Tax return transcript: This transcript shows many of the line items from your 1040, along with forms and schedules filed. This transcript is available for the present and three years prior. It can be used instead of a tax return when applying for a mortgage. Amendments to the return are not reported.
- Wage and income: This transcript is specific to forms you have filed, with a limit of 85. You can order this transcript for the present and the nine years prior.
- Verification of non-filing letter: This document verifies that the IRS has no record of a processed 1040 as of the date requested. This letter can be obtained for the current year or prior three years.
If you receive a tax transcript that you did not request, reach out to the IRS to learn who requested it. This could be a red flag for identity theft.
You can request and receive a tax transcript online. Tax transcripts are compiled from information maintained on IRS servers. If you believe the information in your transcript is incorrect, contact the IRS. One more thing, tax transcripts are free, while a copy of your tax return costs $30.00.
Worried the IRS is investigating your business?
If you have reason to believe your company is being investigated by the IRS, your best defense is a skilled criminal tax attorney. Call us at 440-250-9709 or reach out online to set up a consultation. We serve domestic and international clients from offices in Cleveland and Chicago.
Not sure what to expect if you are already under scrutiny? Download our free eBook, Will I Be Charged with Criminal Tax Fraud? for insights into warning signs and potential legal defenses.
