What Are IRS Tax Transcripts?
2024 Updates to IRS Tax Transcripts
An IRS tax transcript allows individuals, businesses, and other entities to obtain information from past tax returns and wage and income documents. Transcripts provide an overview of the information reported on these forms, but if you've never ordered a transcript or used one, they can be confusing.
To help you out, this guide covers the essentials of IRS tax transcripts. Then, it explains the updates the IRS made to tax transcripts to protect taxpayers from identity theft.
How to Use Tax Transcripts
Account transcripts, tax return transcripts, and wage and income transcripts can be useful in the following situations:
- Validating income for mortgages, loans, or social service applications.
- Responding to IRS notices.
- Filing amended tax returns.
- Filing old tax returns.
- Obtaining lien releases.
- Verifying information related to Advance Child Tax Credits, Economic Income Payments, stimulus payments, overpayments, and estimated tax payments.
- Checking tax account activity (payments, credits, etc.).
Tax transcripts include details such as the date the IRS received the return, tax payments, refunds, transfers between tax years, and overpayment credits. They may also show balance due amounts, interest assessed, and refundable credits. However, the information varies based on the type of transcript.
Types of Tax Transcripts
There are several different types of tax transcripts. The type you need varies based on how you're using it. Here are the five types of tax transcripts.
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Tax Return Transcript
The Tax Return Transcript shows adjusted gross income (AGI) and accompanying forms and schedules for the current year and the last three years. If you're applying for a student loan or a mortgage, you typically need this transcript.
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Wage and Income Transcript
This transcript shows wage and income information the IRS has received from third parties for a specific taxpayer. It includes information from W-2's, 1099's, 1098's, 5498's, and similar forms, and these details are available for 10 years.
Wage and Income Transcripts can be helpful if you're filing an old return and don't have your income information. However, they don't have all the same details as the original forms. They show federal withholding but not state withholding.
They also do not include the name or identification number of the employer. If you need more information than you can find on a Wage or Income Transcript, you may need to work with a tax professional.
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Tax Account Transcript
The Tax Account Transcript shows very basic data from your tax return, including marital status, AGI, and taxable income. It also shows the activity on your IRS account, such as tax adjustments and payments.
With the IRS Online Account or Get Transcript by Mail, you can get this information going back up to three years. If you want older transcripts, you need to file Form 4506-T.
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Record of Account Transcript
The most detailed transcript, the Record of Account Transcript, shows all the details from the Tax Return Transcript and the Tax Account Transcript. It shows the information you have reported on your tax return plus all of your account activity (payments, adjustments, etc.) for the current year and the three prior years.
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Verification of Non-Filing Letter
Although this is not exactly a transcript, you can request it using IRS Online. The Verification of Non-Filing Letter shows that the IRS has not received a Form 1040 from you for the requested year, but it does not explain whether or not you were required to file. This letter is available after June 15 for the current year or at any time for the prior three years.
How to Obtain Your Tax Transcript
The easiest way to obtain a tax transcript is online, but you can also have a transcript mailed to you. The process varies if someone other than the taxpayer is requesting the transcript. Here's what you need to know.
How to Get a Transcript Online
You can request a transcript online through the IRS's Get Transcript Online portal. In the past, you could sign on using an IRS username and password. As of 2024, you need an ID.me account. If you don't have an existing account, you can set up a new account using your photo ID. You may need a phone, and the IRS may ask questions to verify your identity.
How to Get a Transcript Through the Mail
Alternatively, you can use the IRS's Get Transcript By Mail tool to request to have a transcript mailed to you. You simply need your Social Security Number, date of birth, and address plus the type of transcript and the tax year.
Once you enter this information, the IRS will mail a transcript to your last address on file. You should expect to receive the transcript in five to 10 business days. Alternatively, you can request a mailed transcript by calling the IRS's automated phone transcript service number at 800-980-9946.
Obtaining Tax Transcripts Using a Tax Pro
If you want a tax professional to obtain a tax transcript for you, you will need to sign Form 2848 (Power of Attorney and Declaration of Representative) or Form 8821 (Tax Information Authorization). Then, the tax pro can handle the rest.
How to Get a Transcript If You Are Married Filing Jointly
Taxpayers who file as married filing jointly can both request a Tax Return Transcript using Get Transcript Online. However, if the secondary spouse wants to request a Tax Return Transcript through the mail, they must use Form 4506-T (Request for Transcript of Tax Return).
The secondary spouse (the spouse whose name is second on the tax return) cannot use the Get Transcript by Mail option linked above. Only the primary spouse can request this transcript through the mail using Get Transcript by Mail or the IRS's automated phone line.
Faxing Tax Transcripts and Third-Party Mailings
To protect taxpayers, the IRS is no longer willing to fax most types of transcripts. The agency also stopped mailing transcripts to third parties using Forms 4506, 4506-T, and 4506T-EZ.
Obtaining Tax Transcripts for Lenders or Other Third-Parties
If a lender or a similar third party requests a transcript, you can use the above methods to obtain a transcript for them. Alternatively, lenders and others can use the Income Verification Express Service (IVES) to request a transcript. Note that if a third party uses the IVES system, they still must obtain a signature from the taxpayer.
New IRS Transcript Format
In 2021, the IRS created a new tax transcript format, which is designed to reduce the risk of identity theft for taxpayers, and as of 2024, this format is still active. The new transcript hides a variety of sensitive details, but it still shows relevant financial information. The IRS has also updated the process of obtaining a transcript.
Information Hidden on New Tax Transcripts
To reduce the risk of identity theft, the IRS has masked several details on tax transcripts. Here is what is visible on the new tax transcripts:
- Last four digits of Social Security Numbers (SSN)
- Last four digits of Employer Identification Numbers (EIN)
- Last four digits of account numbers
- Last four digits of phone numbers
- First four characters of individual first names
- First four characters of individual last names
- Or, first three characters of first and last names with four letters
- First four characters of business names
- Or, first three characters of four-letter business names
- First six characters of street addresses
- All money amounts
To illustrate, imagine a taxpayer with the following details.
Name: John Smith
Social Security Number: 123-45-6789
Business: ABC Consulting, LLC
Address: 123 Main Street
Big City, Tennessee 12345.
Their transcript will show the following:
Name: JohX SmitX
SSN: XXX-XXX-6789
Business: ABC CXXXXXXXXX
Address: 123 MaXX XXXXXX
However, their transcript will still reflect all of the money amounts including wage and income information, balance due, and interest and penalties. Masking identifying details but not money-related amounts allows the transcript to be useful, while simultaneously reducing the risk of identity theft.
Unmasked Transcripts
The new transcript format is referred to as masked. This is because it "masks" or hides identifying details. However, you can still get unmasked transcripts that show the taxpayers's full name, Social Security Number, and other details.
Individuals can only view masked transcripts online, but they can order unmasked transcripts online and have them delivered to their last address on record. Tax professionals can obtain unmasked Wage and Income Transcripts through the Transcript Delivery System (TDS).
Customer File Numbers
Because Social Security and Employer Identification Numbers are no longer visible on tax transcripts, it can be confusing for third parties to remember whose transcript they are viewing.
For example, if a lender is using tax transcripts to verify income for Marvin Peters and Mary Peterka, their masked names will be virtually indistinguishable.
Of course, the lender can easily figure out whose transcript they are viewing when they look at the last four numbers of the Social Security Number or the beginning of the customer's address. But to help a bit more in this situation, the IRS has introduced a customer file number.
What is a customer file number? It's a unique 10-digit number that helps to identify tax transcripts. Lenders and other third parties can assign any 10-digit number (except for the taxpayer's Social Security Number) to the taxpayer when they request a transcript. The number should be included on line five of Form 4506-T, 4506T-EZ, or Form 4506-C.
Individuals can also manually add customer file numbers when using Get Transcript Online or Get Transcript by Mail. To explain, imagine an individual is requesting a transcript for a lender and the lender provides the individual with an account number. The taxpayer can simply enter that number when they request the transcript. Then, the number will be printed on the transcript when they receive it.
Get Help Obtaining a Tax Transcript
If you need help obtaining a tax transcript or dealing with any other tax-related issues, you may want to reach out to a tax professional. At Tax Cure, we have a directory of tax pros, including CPAs, enrolled agents, and tax attorneys, and our system lets you easily search for a professional experienced in your specific tax concern. To learn more, use TaxCure to find a tax pro today.