What is a tax transcript?

by Colin Lalley
What is a tax transcript?

Most of us want to file our taxes and move on with our lives, but occasionally we have to revisit them. Maybe we forgot to keep a copy of our return, or maybe we’re applying for a loan that needs some financial information.

The bright side is that getting a tax transcript to view your tax return information line-by-line is a pretty painless process. With a few clicks online you can have a summary of your return sent to you and you can be well on your way to not thinking about your taxes again until next April.

Why you need a tax transcript

A tax return transcript is basically a recap of your previous tax returns and includes line items for different entries like wages, taxable interest, and so on.

This isn’t to be confused with a tax account transcript, which shows high-level things about your filing status like your marital status, the return type, payments, and any changes you made after you filed.

Getting a tax transcript can come in handy in certain situations. You might want one for your records, and it can make it easier to do future taxes because it gives you an idea of what your taxable money looked like in previous years.

You’ll also need them for different financial situations. If you want to amend a prior year’s tax return you’ll need a copy of that year’s transcript; student aid applications require a transcript; and you’ll often need one when you apple for a loan to buy a home or start a business.

Luckily, ordering a tax transcript is pretty easy. The IRS has a free, appropriately-named program called Get Transcript where you can order a hardcopy of your transcript. (Why no electronic copies? We’ll get to that in a bit.) You can request a transcript for the current year or the three previous years; if you want one for a year older than that, you’ll need to fill out a separate form.

If you’d rather order your transcript over the phone, you can do that, too. All you have to do is call up the IRS and request one, and they’ll mail it out to you.

You’ll need your Social Security Number or your Individual Tax Identification Number, your date of birth, and the mailing address of your last return. That’s pretty much it! It can take up to eight weeks after you request before you receive your transcript, so you’ll have to sit tight, but other than that you’ll be the proud owner of your very own tax transcript. Congrats!

While you can get a copy of either your return or account transcript, neither should be confused with a copy of your full return. That’s exactly what it sounds like – a full duplicate of your return – but that costs $50 and isn’t available through Get Transcript. You need to request it through this form.

Watch out for fraud

So, this is all well and good. There has to be a catch, right?

There is that bit about fraud…

Yes, not even the IRS is immune to identity theft. Don’t feel bad, IRS, no one else seems to be able to avoid it either.

In May of 2015 the IRS reported that criminals used the the Get Transcript program, along with "taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information on approximately 100,000 tax accounts...This data included Social Security information, date of birth and street address."

That’s bad, but it gets worse.

In August, the IRS discovered more abuse of Get Transcript, and notified "about 220,000 taxpayers where there were instances of possible or potential access to ‘Get Transcript’ taxpayer account information. As an additional protective step, the IRS will also be mailing letters to approximately 170,000 other households alerting them that their personal information could be at risk."

And, finally, in February of 2016, there was yet another announcement that "further review found potential access of approximately 390,000 additional taxpayer accounts."

The May 2015 finding is why the online viewing and download feature of Get Transcript is no longer available, and why we can’t have nice things. It’s yet to be seen when – or even if – the IRS will reinstate that feature, but in the meantime you can still go online to request your transcript by mail. And remember: the IRS will never email you to tell you that you need a copy of your transcript, so don’t fall for that sort of scam.

So while tax transcripts are useful, it seem like the IRS still has a way to go before they’re implemented properly in the modern age. Once they handle this, maybe the IRS can go about modernizing other parts of our taxes, like return-free filing.

We can only hope.

Image: H