When applying for a home loan, business loan, healthcare program, student aid, and other loans, your income and tax information are typically required.  While a tax return is usually sufficient if you keep good records, mortgage lenders often prefer a tax transcript from the Internal Revenue Service (IRS) because tax returns can be easily forged.

Perhaps you are at that stage in your home loan processing, or you would like to have the necessary information before beginning your mortgage process. This article is a complete guide that provides you with all of the information you need to obtain your IRS transcript successfully.

 

What Is An IRS Transcript?

A tax transcript from the IRS is a document containing a summary of your tax information. It is an official summary of your federal tax return, adjusted gross income (AGI), filing status, payments, and return type that a lender requires and reviews to complete your loan approval.

Your tax transcript only shows the last four digits of your Social Security Number, name, and other personal information to protect your privacy.

Why Do You Need An IRS Transcript?

As part of the loan application process, mortgage lenders typically require at least two years of tax information and prefer to receive it directly from the IRS rather than a copy of your tax return. This allows them to verify your previous income while also assisting them in reducing mortgage fraud.

The following are the major reasons your lender requires your IRS transcript;

• To confirm your income history.

• To ensure that the information on your tax return is genuine and free of fraud.

• To check your tax status with the IRS.

• To determine your payment capacity.

In addition, if you no longer have copies of your tax returns, a tax transcript is a simpler and less expensive option for your loan application.

 

Types of An IRS Transcript

The IRS issues five different types of transcripts. The kind of transcript you request will be determined by the information your lender requires. As a result, we'll discuss the various types of tax transcripts to guide your request.

1.  Return Transcript

This is the most common type of tax transcript. It is also the most effective for mortgage applications. However, it can be used for other types of loan applications.

Your tax return transcript contains information, such as your tax return and adjusted gross income (AGI). But, it does not include changes made after you filed your original return.

Tax return transcripts are available for the current tax year and the three previous years in which you filed.

2. Tax Account Transcript

This type of tax transcript confirms your estimated tax and changes made after you filed your original return.

Your tax account transcript will include basic information such as filing status, taxable income, AGI, and payment types.

It is available for the current year and up to ten prior years for which you have filed (if you request your transcript online) and up to three prior years for which you have filed (if you request your transcript over the phone or by mail).

3. Record of Account Transcript

This is a more detailed transcript that combines the information from the tax return transcript and tax account transcripts into a single document.

It is available for the current tax year and the previous three years.

4. Wage and Income Transcript

This type of transcript includes information from your W-2s, 1099s, 1098s, and IRA contributions. It helps keep a personal record of your income, confirming your status before filing a late or extended tax return, and verifying your employment status for a lender.

The wages and income transcript is available for the current tax year and up to ten prior years (if requested online or with Form 4506-T).

Note that the wages and income transcript for the current tax year may not be available until July.

5. Verification of Non-Filing Letter

When the IRS does not have your return on file or has not yet processed your filed return, a verification of non-filing transcript is issued.

This type of transcript is useful if you want to receive certain public benefits, such as low-income housing, and your lender requests proof of non-filing.

A letter of verification of non-filing is available for the current tax year as well as three prior tax years. 

 

How To Request For Your IRS Transcript

You can obtain a free IRS transcript at any time by using any of the following methods:

Request For Transcript Online

This is the simplest and quickest way to obtain your tax transcript. In addition, it gives you the option of delivering the transcript directly to your lender's mail, thereby confirming its authenticity.

• Go to the IRS website at www.irs.gov.

• Select "Get Your Tax Record."

• Then, select "Get Transcript Online."

If you don't already have an IRS username or an ID.me account, create an account. The following information will be required of you:

• Your social security number and date of birth.

• Your most recent tax return's filing status and mailing address.

• An email address.

• Your credit card number or a mortgage, home equity loan, or home equity line of the credit account number.

• A phone with your name on the account.

• Photo verification.

After successfully submitting your information, click the "Continue" button to save it in the IRS portal for future use.

• Indicate why you require a transcript and the tax years you need.

• View your transcript. A typical return transcript is between 5-and 7 pages long.

• Print your document after downloading it.

Request For Transcript By Mail

If you are unable to obtain your transcript online for any reason, you may request a tax return or tax account transcript by mail by following the steps below:

• Go to the IRS website at www.irs.gov.

• Choose "Get Your Tax Record."

• Choose "Get Transcript By Mail."

• Fill out form 4506-T to request your transcript by mail; the form can be downloaded from the IRS website.

• A paper IRS transcript will be mailed to the address on file with the IRS, which is usually the address from your most recent tax return.

Fill out Form 8822 if your address has changed since you last filed your tax return. A change of address may take up to 6 weeks to take effect.

Request For Transcript Over The Phone

You can also get your IRS transcript mailed to you by calling the automated phone of the transcript service.

• Call the agency at 1-800-908-9946 and request that your transcript be mailed to you.

• Enter your Social Security Number and any other information that is requested.

• Indicate how many tax years you require for your transcript.

• Wait for 5 to 10 calendar days after submitting your request for your transcript to be delivered. After that, your paper transcript will be mailed to the address on file with the IRS.

 

Request Tax Transcript At Your Local IRS Office

You can get your IRS transcript from a local office if one is available in your area. However, you must make an appointment with them because they do not accept walk-in transcript requests.

• Call 844-545-5640 to schedule an appointment with the nearest IRS office.

• Visit the office on the scheduled date.

• Complete Form 4506-T.

• If you have your tax returns with you, please present them.

 

Final Note

The IRS transcript is an essential piece of documentation in your mortgage process. Your lender will require them to evaluate your income history and payment ability and to verify the information contained in your loan application. Once you present your tax transcript to your lender, you are one step closer to getting a mortgage approval.