In this age we know that information is power. Tax transcripts are increasingly important for providing primary information to efficiently handle federal tax issues. As a tax adviser, I find that the level of federal tax information available to clients is poor and is often dominated by misinformation and misunderstanding. Tax transcripts give us the most direct path to resolving this problem by offering a reliable authoritative source of information.
This blog post presents basic information about tax transcripts in bullet point format.
- The IRS offers five types of tax transcripts. Each is suited for a different specific purpose. The types are: 1) Account Transcript, 2) Wage and Income Transcript, 3) Tax Return Transcript, 4) Record of Account Transcript, and 5) Verification of Nonfiling Letter.
- There are several ways to obtain a tax transcript including online and by phone with fax or mail delivery. Transcripts are not sent via email.
- Tax transcripts are available to your representative (accountant attorney or other person) who has a power of attorney form on file with the IRS.
- Tax transcripts contain code numbers. To understand the transcript, you must understand the codes. IRS published a list of the code in this pocket guide.
- Sometimes a tax transcript is not sufficient and copy of the filed tax return from IRS is necessary. The fee for a copy of a tax return is $50. In contrast, tax transcripts are free. For more information, See this IRS.gov web page.
- The primary concern of IRS in issuing tax transcripts is security of the information. IRS requests verification of identity using several different methods.
- The easiest way for a taxpayer to obtain and understand a tax transcript is to use a tax professional who is experienced in this matter.
I am pleased to help clients obtain reliable federal tax information and to better understand their tax situation. Accurate information about past years’ tax status is the best starting point for successful tax planning for the future.