Requesting transcripts from the IRS: not as scary as it sounds!
Record-keeping may not be your strong suit. Luckily, the IRS keeps records for you.
The IRS collects information throughout the year from sources other than tax returns and cross-checks forms filed and looks for discrepancies.
Before you file your taxes, it is often advisable to request a transcript from the IRS, just in case there is
something you forgot.
Any document filed with your Social Security number (SSN) or your business’s Employer Identification number (EIN) on it can potentially (and likely will) end up in the hands of the IRS. If there is a form filed with your name on it, you should know about it and question it if necessary.
These include:
W-2: Salaries & Wages paid to EMPLOYEES. Includes employee’s SSN and payor’s EIN.
1099: The most common types of 1099s issued annually are:
1099-MISC: Wages paid to Independent Contractors. This will include the payor and payee’s EINs
This form is also shows total Rents and Royalties and Other Income paid and how much federal and state tax was withheld.
1096: The total amount of 1099’s paid by an employer shows up on Form 1096.
1099-S Sale of house or other major property
1099-B for income from interest, stocks, bonds, etc.
1099-K Issued by credit cards, showing the total payment transactions
1098: Shows the amount of mortgage interest you paid throughout the year, usually to a bank. Sometimes this form includes the principle balance remaining on the loan.
1098-T: Shows the total tuition paid to an institute of higher learning
1095 Tracks health care insurance to ensure minimum essential coverage, required by "Obamacare."
K-1: These are filed by businesses, trusts and estates. Similar to 1099’s, Schedule K-1’s include information relating to income, distributions, and how much capital you have invested in a business.
The above forms reflect how much income you made and how much tax was withheld. If you have withheld more money than you owe in the current year, money may come back to you in form of a refund.
You can see what tax payments you’ve made and when you’ve made them. For example, you can ask how much tax you have paid in so far for 2015. The IRS transcript may tell you that:
You made ESTIMATED payments every quarter totaling $10,000 ($2,500 each)
You made an EXTENSION payment on April 15, 2016 of $1,500
$7,000 has already been withheld from your employer on your W-2.
So the total that you have paid in for 2015 year is $18,500.
What was your tax liability in 2014? if it was $18,500 or less, you’re probably in good shape.
You can request information directly from your work, business, bank or payroll service; but if that fails, you can check what has been filed with the IRS. Keep in mind that the IRS also communicates with state and local taxing authorities and that it can take weeks for the IRS to mail you information. The sooner you request transcripts, the better.
The benefit of requesting a transcript from the IRS is to see what they have on record. Once you have a clear picture of what the IRS has in file, you can minimize the amount of surprises.
If you have additional questions about requesting a transcript, contact a tax professional!
