How to Read a Tax Return Transcript?Personal Taxes
The IRS processes over 90% of all tax returns it receives during a filing season in three weeks.
That’s why most taxpayers don’t need to know how to read a tax return because they receive their tax refund within the regular three-week timeframe. Hence, in most cases, having access to a tax return transcript is unnecessary.
This document can be useful if you want to apply for a mortgage or a small business loan.
We’ll show you how to gain access to your tax return transcript and interpret it.
Table of Contents
What is a Tax Return Transcript?
All taxpayers have free access to five transcript types, so depending on your needs, you can request a Record of Account, Tax Account, Verification of Non-filing Letter, Wage and Income, or Tax Return transcript.
Please note that the information you’ll find in each tax transcript type is slightly different.
A tax return transcript contains nearly all line items from Form 1040, 1040A, or 1040EZ and any additional Forms or Schedules you file with the original tax return.
This tax transcript type doesn’t contain the changes the IRS makes after you file a tax return. Consequently, you cannot use it to monitor your tax return processing status.
The document is valid for the current and three subsequent tax years, and it is commonly used for the following purposes:
- Mortgage applications
- Student loan applications
- Loan applications for small businesses
Gaining Access to a Tax Return Transcript
The IRS website has the Get Transcript section, so the only thing you need to request a tax return transcript online is an IRS account. This tool is only aimed at individual taxpayers who need tax transcripts for different purposes.
In case you filed a tax return jointly, the secondary spouse can also use the Get Transcript tool or Form 4506-T to request a tax return transcript.
However, you’ll have to complete the following steps before you or your spouse can view this document online if you’re not a returning taxpayer:
- Enter your name and email address into a designated field
- The IRS will send you a confirmation code
- Type the code you received into the designated field
- Enter your SSN, the address from the last year’s tax return, date of birth, and filing status
- Use the last eight digits on your credit card, home mortgage account number, or some other applicable financial account information for verification purposes
- Provide your mobile phone number to receive an activation code
- Insert this code into an appropriate field
- Proceed to select a username and password and choose a website image
Afterward, you can view your tax return transcript online or print it.
Optionally, you can call 800-908-9946 if you want to receive it via mail but keep in mind that the IRS needs up to ten workdays to deliver a paper version of a tax return transcript to your home address.
The Elements of a Tax Return Transcript
This document doesn’t contain a high number of elements. You’ll find the Request Date, Response Date, and Tracking Number in the upper right corner of the page, next to the document’s title.
These dates only indicate when you made the request and when the IRS responded to your request. SSN provided and Tax Period Ending sections are located directly below the document’s title.
Their role is mostly informative, as these sections only provide information about the taxpayer’s identity and the current tax period.
The document also shows the account balance, accrued interest, and accrued penalties values that indicate how much the IRS owes to you and any fees you must cover.
In case you filed a tax return jointly, the tax return transcript will contain your and your spouse’s SSN, your names as shown on the return, and your address.
As you scroll down the page, you’ll be able to see the following information:
- Filing status (single or married filing jointly).
- Form Number (usually Form 1040 or a similar form).
- Cycle Posted.
- Received Date.
- Exemption Number.
- Dependents (Name and SSN).
- Preparer SSN and EIN.
It’s worth noting that the Cycle Posted refers to the account’s updating frequency. The term is similar to the cycle code you’ll find on a tax account transcript.
The bottom section of a tax return transcript contains an itemized overview of a taxpayer’s income. Let’s look at some of the information you’ll find in this section:
- Wages, Salaries, Tips
- Taxable Interest Income (Schedule B)
- Qualified Dividends.
- Alimony Received.
Unlike the values in other tax transcript types, the values next to each income type in a tax return transcript can either be zero or positive.
It’s also worth adding that tax return transcripts don’t contain Transcript Codes (TC) that indicate different types of actions the IRS takes while processing a tax return.
The Most Common Tax Transcript Codes
Tax Account Transcripts don’t contain detailed information about a tax return like tax return transcripts; instead, they show the most recent transactions the IRS assigns to a tax account.
The IRS uses Transcript Codes to communicate these transactions to a taxpayer, enabling them to monitor the processing of their tax returns.
Here’s a quick overview of the most common tax transcript codes:
- TC 150 – This code is added to a tax account transcript as soon as a tax return enters the IMF system.
- TC 766 – Taxpayers eligible for the child tax credit will see this code in their tax account transcripts. The value next to the code should always be negative (-$0,00).
- TC 768 – The IRS uses TC 768 to communicate transactions related to the Earned Income Tax Credit. This value is also negative.
- TC 570 – Code 570 appears in a tax account transcript if the processing of a tax return is delayed.
- TC 806 – This code shows the amount withheld from a taxpayer’s wages during a tax year.
- TC 846 – Refund Issued code appears on a tax account transcript once the IRS finishes the processing of a tax return and approves a refund.
Frequently Asked Questions
Most taxpayers don’t need tax return transcripts unless they want to apply for a mortgage or a loan.
A tax return is a form you must fill out to file taxes, while a tax return is a document you can request from the IRS that contains information you included on a tax return.
Taxpayers can request all types of tax transcripts, including the tax return transcript from the IRS for free.
Yes, you can. The IRS allows taxpayers to access tax return transcripts for the last three tax years.
Contact a CPA
Interpreting a tax return transcript can be difficult if you’re not familiar with the terms and codes the IRS uses in these documents. Go to choicetaxrelief.com or call 866-8000-TAX to schedule a free consultation with a CPA who can help you read your tax return transcript.
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.