UPDATE 22 JANUARY 2022 – The IRS has significantly simplified the way you create and use your account on their website. I wrote a new blog post with instructions on setting up your account and using the new system. Please see this link: How to get your Economic Impact Payment or Advance Child Tax Credit Payment amounts
Do you have your 2017 form 1040 on extension? If you do, it’s due on or before October 15, 2018 and that date will be here before you know it. The next two months will go by fast so you should really get your documents together and give them to your tax professional. This post is a tip for those of you who think you might be missing something.
What is an IRS Wage & Income Transcript?
The IRS Wage & Income Transcript is a listing of all the information reports that the IRS has received for you. The main items of importance that it includes are the W-2’s and 1099’s that are issued to you. When your employer sends you a W-2 for the prior year, there is a duplicate copy filed with the IRS. The same goes for the 1099-INT that your bank sends to you. In fact, all the IRS documents that get sent to you after the prior year is over has a duplicate copy that is filed with the IRS.
If you’re wondering what the IRS does with this information, they build an annual file about you and then they compare what they have received with your tax return. When you hear about the IRS matching system, this is what we’re talking about. They don’t get everything you need for your return but pretty much all the income an individual receives, as well as items like mortgage interest, student loan interest, etc., are reported to the IRS. If you don’t have a side business, then the IRS already knows most of what should be on your return.
Items that aren’t reported to the IRS include medical expenses, charitable contributions and other itemized deductions.
Why do you need an IRS Wage & Income Transcript
The main reason you need an IRS Wage and Income Transcript is because it will help make sure you report all your income on your tax return. I know that sounds obvious, but the IRS will send you a tax notice if you forget to include something that has already been reported to them. The notice you receive is called a CP2000 and, if you receive one, you should contact your preparer promptly. These notices can be resolved easily but the best path to take all depends on your individual circumstance.
I personally see this happen a couple of times a year. It’s usually the result of someone who simply didn’t receive a Form 1099 for a variety of reasons, like it was mailed to a prior address or a mail delivery snafu. I also have a few clients that get so many of them that they forget to give them all to me.
Tax professionals can get this transcript for any of our clients, as long as the client has executed a signed Form 2848, Power of Attorney. Then the Power of Attorney has to be faxed or mailed to the IRS and it had to be entered into their system before the he IRS gives us access to your transcript. Over the years, the IRS made it easier to get these steps completed, then after taxpayer identity theft became common, they made it much more complicated. I’ll admit the trade-off of more security does make it safer for taxpayers but it also makes it more time complicated for tax professionals. That being said, the IRS is making this tool available to all taxpayers which you can use to download the transcript and give to your tax preparer.
How to get your transcript
UPDATE 22 JANUARY 2022 – The IRS has significantly simplified the way you create and use your account on their website. I wrote a new blog post with instructions on setting up your account and using the new system. Please see this link: How to get your Economic Impact Payment or Advance Child Tax Credit Payment amounts
Bear with me. The IRS doesn’t advertise that this is available and it’s buried pretty deep inside their system. If I didn’t know better, I’d say they hope you didn’t find it on your own.
First, you’re going to need to go to the IRS website www.irs.gov.
Find the button that says “View Your Account” – right now it’s right on the homepage but they have a tendency to mess up their site from time to time. I’ve tried to give you the link but, they might move it in the future. If the link doesn’t work, just go to their website and search for it.
From the screen that comes up, you have two options. Since this is your first time using the service, I recommend clinking on “Tax Record (Transcript)” from the left menu. Once your account is set up, the next time you need to use this service you can click “View Your Account” to get directly to the login screen.
You’ll be taken to a web page that describes the IRS services available and how to proceed. Your going to want to click on “Get Transcript Online” and then setup your account. Before you get to this spot, here is what you’ll need to proceed:
- your SSN, date of birth, filing status and mailing address from latest tax return,
- access to your email account,
- your personal account number from a credit card, mortgage, home equity loan, home equity line of credit or car loan, and
- a mobile phone with your name on the account.
Once you get your account set up and logged into the system, you’ll see a bunch of useful information. The Wage & Income Transcript isn’t explicitly labeled so scroll down to the bottom of the screen and look for “Get Tax Records Online” so you can get to the good stuff.
Clicking on “Get Tax Records Online” will open a new browser tab and you’ll see “Get Transcript” with a drop down box giving the IRS a reason why you’re asking for it. Select “Federal Tax” and the screen will refresh with additional options showing up below.
You want to find “Wage & Income Transcript” in the bottom right side of the screen.
Click on 2017 and then a new browser tab will open up with your transcript as a pdf document. You should save this pdf and then you can give it to your tax professional. I do want to add at this point, please only give it to your tax professional through a secure method. All reputable tax professionals will give you a secure method to share documents. Sometimes it’s a secure email program or a client portal, but what ever it is, please do not email this document through a normal email program.
This is the top portion of the Wage and Income Transcript just so you know what you’re looking for:
If you have any trouble getting this form on your own, or just don’t want to go through the hassle, let me know and I can help you. Also, I can’t guarantee the IRS will leave this available in the future or that they won’t make it more complicated to get to. They tend to mess things up from time to time so it gets harder to find resources on their website. If you can’t find it, I can also help you out.