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    Categories: Audits and Tax NoticesIRS

How to Use Form 4506 to Get Your Tax Information

If you’ve ever applied for a loan, especially a mortgage, you may have had to sign an IRS form: Form 4506 or Form 4506-T.

Lenders use these forms to verify your income with the IRS. When you sign the form, the IRS sends a copy of your tax return information for specific years to your mortgage lender.

You can also use Form 4506 to get your own tax information. You may need your information to:

  • Help file an accurate return.
  • Deal with the IRS.
  • Complete financial transactions.

Here’s how to get your tax information using these forms:

Form 4506, Request for Copy of Tax Return, takes longer and costs $50 per return

Form 4506 is useful if you need a copy of your tax return from more than three years ago. But be prepared to wait. After mailing the form, it can take up to 75 days to get a copy of your return – and it costs you $50 per return.

Form 4506-T, Request for Transcript of Tax Return, is faster and cheaper

This form is now standard for many mortgage companies.

Form 4506-T is free, and transcripts generally arrive in about three weeks. When you file the Form 4506-T, you’ll receive a printout of most of the line items on your tax return (rather than a copy of the actual return). This document is called a tax return transcript.

The 4506-T also shows your tax account and income information

In addition to your tax return transcripts, the Form 4506-T gives you:

1. Tax account transcripts

These show a history of each tax form you’ve filed for at least the past five years, plus any other years that have had recent activity (which isn’t common unless you owe taxes for past years). The transcript will show:

  • Filing dates
  • A summary of tax return information (like filing status, dependents, adjusted gross income, tax liability, and payments)
  • A record of any transactions that happened after you filed (like some notices, payments, penalties, or audit results)

Why you’d want a tax account transcript

This transcript is useful if you want to know about:

  • Estimated tax payments you’ve made
  • Any penalties the IRS charged (or, “assessed”) on your account
  • Any IRS collection or audit activity

Keep in mind: The IRS records this transaction activity in its own jargon. It can be confusing to decipher. It really helps to “speak IRS” (or get a tax pro) to decode IRS tax account transcripts.

2. Wage and income transcripts

This transcript shows all the information statements filed under your taxpayer identification number (typically your Social Security Number). These are forms like W-2s, 1099s, 1098s, etc – and they show your income information that the IRS matches against your filed tax returns to make sure you’re reporting all of your income.

Why you’d want a wage and income transcript:

This transcript is helpful to identify all the income and information the IRS has about you so you can use it while preparing your return.

The most current version of this transcript isn’t available until late May, so you can’t use it to help prepare your return during tax season. But – you can use it to prepare an extended return or a back tax return.

Keep in mind: The wage and income transcript contains only federal income tax withholding on Forms W-2. It doesn’t show state income tax withholding. To see that, you’ll have to track down your original W-2 from your employer.

There are easier ways to get transcripts

Before completing Form 4506-T, mailing it to the IRS, and waiting weeks for the transcripts, you may want to look at some faster alternatives:

  • Order transcripts by phone or online to be delivered by mail: Call (800) 908-9946 or go to Get Transcript by Mail. Transcripts will arrive in about 10 days.
  • Use IRS Get Transcript: You can set up an online account with the IRS and download your transcripts. But keep in mind that about 30% of taxpayers have had difficulty accessing the online tool in the past year because of the strict authentication process to set up an account.
  • Outsource it to a tax pro: You can authorize your tax pro to contact the IRS and get your transcripts for you. Tax pros have their own online accounts with the IRS and a dedicated hotline. An experienced tax pro can also help you interpret the information.

There are lots of ways to get your tax information

Most of the time, IRS transcripts fit the need.

They also provide a wealth of information. But, like understanding taxes, understanding transcripts can be tough because of IRS jargon and internal codes.

If you need your tax information, and an understanding of what it means, getting your tax pro to obtain and interpret it for you is the easiest and quickest thing to do. Learn more about how to research your IRS account, or how to get a tax pro to contact the IRS for you.

Elyce Luegers :