The Internal Revenue Service routinely complies with requests to furnish individuals with a record of their taxes. In most cases, tax returns and tax transcripts are needed to prove your income. For example, when you're ready to buy a home, a mortgage lender may require your tax transcripts to decide whether or not to approve your application. Both tax returns and tax transcripts provide information about your taxes, with the transcripts giving a synopsis of vital data and returns giving more details. Only tax returns can be certified by the IRS.
Both tax documents are based on the annual tax return you file with the IRS -- usually on Form 1040 or one of its simpler versions. The information you provide is used to compute your income tax obligation to the federal government, as well as state and local governments if they, too, tax your income. The tax return will highlight your income for the previous year, whether the source was a salary or wages, dividends, interest, capital gains or other profits.
A tax account transcript, sometimes called a tax transcript, can be obtained from the IRS and will show the financial status of your account, including payments made or penalty assessments. It will also show basic data that is generated from your tax return, such as the type of return you filed and your marital status, gross income and taxable income. The transcript will also include any adjustments undertaken, either by you or the IRS, after you filed your return. The IRS can provide a transcript for the current and past three years.
Differences Between Documents
A tax return is the original document you submit to the IRS using Form 1040, 1040 A or 1040EZ, together with any schedules and additional supporting forms. You can either prepare it yourself or have a tax professional do it for you. A fee is required to get a hard copy of your actual tax return from the IRS. A tax transcript can only be retrieved from the IRS database after your tax return has been processed in the agency's system. Transcripts are free.
You can order your tax transcript from the IRS by by phone or by filling out and submitting Form 4506T-EZ Short Form Request for Individual Tax Return Transcripts. It will usually be in the mail within five to 10 days. Transcripts can also be sent to third parties at your request. You can also get an exact copy of your previously filed and processed tax return including all attachments. This requires you to submit Form 4506 with an appropriate fee. Tax returns may take up to 60 days to process.
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