Tax transcripts are treasure troves of information. Accessing and deciphering that information, however, is another thing entirely. Until recently, accessing and translating transcripts was prohibitively difficult. It was often easier to get as much information from the client as possible and hope it was accurate.
However, now that Tax Resolution software (like Canopy!) makes accessing and translating transcripts easy, there’s no reason not to use transcripts for nearly every case.
An account transcript is an annual record of a taxpayer’s account with the IRS. These documents are available from the 1980’s through the current year. Account transcripts are a good way to check for:
- Detailed taxpayer information (SSN, address, etc.)
- Compliance (no missing returns)
- Amended returns
- Substitute for returns
- Type of return filed
- Filing Status
- Bankruptcy or CDP
- Previous or in-progress OIC’s
- Active and resolved collection issues
- Tax liens filed
- And more!
Account transcripts are arranged annually and are updated weekly.
Wage and Income Transcript
A wage and income transcript shows a taxpayer’s detailed income as reported to the IRS. A wage and income transcript is where all of a taxpayer’s information concerning W-2s, 1099s, 1098s, K-1s, and 5498s is shown and can be helpful for verifying employment or filing an extended tax return.
These transcripts can be longer than 100 pages, but tax professionals may also request a one-page summary version. Wage and Income transcripts are available for the prior 10 years, but the most recent year’s information may not be complete until July.
Tax Return Transcript
A tax return transcript shows most line items from a taxpayer’s tax returns as they were originally filed. This transcript won’t reflect any changes made after the return was originally filed, whether by the taxpayer, a tax professional, or the IRS.
A tax return transcript is usually needed by institutions that offer mortgages and student loans. You can request a tax return transcript for the current tax year and the prior three years, but information usually takes 3-6 weeks to post after acceptance of a return.
Itching to learn more about how to use tax transcripts in your tax practice?
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