What Are the Different Types of IRS Transcripts?

When you need to prove your income or tax history, you might think your filed tax return is the only document you need. However, the Internal Revenue Service (IRS) offers official summaries of your tax information called transcripts. An IRS transcript provides a detailed look at your tax history and is often required for significant financial events, such as applying for a mortgage, securing a student loan, and, most importantly to us, navigating bankruptcy proceedings.

Understanding the different IRS transcript types is essential because each one serves a unique purpose. The IRS provides five kinds of transcripts for individuals, all free of charge. The bankruptcy attorney at the Law Office of Michael Schwartz will walk you through each type, explain why they are crucial in bankruptcy, and show you how to obtain them. Knowing which transcript to request can save you time and ensure you have the correct documentation for your specific needs.

The 4 Main IRS Transcript Types

The IRS provides several types of transcripts, each containing different information from your tax records. Here are the four most common ones available to individuals.

1. Tax Return Transcript

A Tax Return Transcript shows most of the line items from your original Form 1040-series tax return as it was filed. This includes your Adjusted Gross Income (AGI), which is a critical figure for lenders and government agencies. It’s important to note that this transcript doesn’t reflect any changes made after the initial filing, such as amendments or adjustments made by the IRS.

When to use it:

  • Applying for student loans or financial aid (FAFSA).
  • Applying for a mortgage or other personal loans.
  • Providing proof of income without sharing your entire tax return.

2. Tax Account Transcript

A Tax Account Transcript provides a summary of your account activity for a specific tax year. It includes basic information like your marital status, return type, and AGI. Unlike the Tax Return Transcript, this document shows any changes made to your account after you filed, including additional tax assessments, penalties, and payments. It also displays key dates, such as when the IRS received your return and when it was processed.

When to use it:

  • Understanding your payment history and any outstanding balance.
  • Verifying that the IRS has processed an amended return.
  • Checking for any adjustments made by the IRS to your account.
  • Essential for bankruptcy attorneys to determine tax debt dischargeability.

3. Record of Account Transcript

As its name suggests, the Record of Account Transcript is the most comprehensive option. It combines the detailed line-item information from the Tax Return Transcript with the account activity and changes from the Tax Account Transcript. 

This all-in-one document gives you a complete picture of your tax history for a specific year. Due to its size, it is not available for online viewing and must be sent by mail.

When to use it:

  • You need a complete record of your original return and all subsequent changes.
  • Resolving complex tax issues with the IRS.
  • Providing a comprehensive tax history to a legal professional.

4. Wage and Income Transcript

The Wage and Income Transcript lists data from information returns the IRS has received from third parties under your Social Security number. This includes information from Forms W-2 (wages), 1099 (independent contractor income, interest, dividends), and 1098 (mortgage interest). 

It provides a list of all income sources reported to the IRS, which can be useful for preparing your tax return or verifying your income history. This transcript is generally available for the current tax year by July.

When to use it:

  • Preparing a tax return when you are missing a W-2 or 1099.
  • Verifying that all reported income has been included on your tax return.
  • Checking for discrepancies between what you reported and what was reported to the IRS.

There is also a fifth document, the Verification of Non-filing Letter, which simply provides proof that the IRS has no record of a processed tax return for you for a specific year. This is often required for loan or financial aid applications if you were not required to file taxes.

Why IRS Transcripts Are Crucial in Bankruptcy

When filing for bankruptcy, IRS transcripts become more than just a record of your financial past; they are essential documents that play a critical role in the success of your case. Attorneys and bankruptcy trustees rely heavily on these transcripts for two primary reasons: to meet mandatory documentation requirements and to form an effective legal strategy.

Mandatory Documentation for the Court

The U.S. Bankruptcy Code has strict rules about tax compliance. To receive bankruptcy relief, you must prove that you have filed all required tax returns.

  • Proof of Filing: You are required to provide the bankruptcy trustee with a copy or transcript of your most recently filed federal income tax return at least seven days before the first meeting of creditors.
  • Filing History: The requirements vary by chapter. Chapter 7 filers must show they have filed returns for the last three years. Chapter 13 filers must have filed all returns for the four years before their bankruptcy filing.
  • Consequences of Non-Compliance: Failing to provide these documents can lead to your case being dismissed. Without proof of tax compliance, you may not receive a discharge of your debts.

Essential Data for Legal Strategy

For a bankruptcy attorney, tax transcripts are indispensable tools for analyzing your financial situation. Specifically, the Tax Account and Tax Return Transcripts provide the data needed to determine if your tax debts can be discharged.

  • Determining Dischargeability: While most tax debts are not dischargeable, some older income tax debts can be wiped out if they meet specific conditions related to timing and filing. Transcripts contain assessment dates, filing dates, and other activity codes that allow your lawyer to calculate when a tax debt becomes “old” enough to be potentially discharged.
  • Verifying Debt Amounts: Transcripts confirm the exact amount of tax debt you owe, ensuring there are no surprises from the IRS during your case.
  • Identifying Key Activity Codes: The transaction codes on a transcript provide a detailed history of your account. These codes reveal audits, collection holds, and other events that are critical for calculating the precise dates that determine if a tax debt is dischargeable.

Without these transcripts, it is nearly impossible for an attorney to advise you on the best time to file your petition to maximize your financial relief.

Take the Next Step with the Help of the Law Offices of Michael Schwartz

Understanding your tax history is a powerful step toward financial clarity, especially when facing significant debt. IRS transcripts provide the official record you need for loans, legal matters, and personal verification. If you are struggling with tax debt and considering bankruptcy, these documents are not just helpful — they are essential.

The rules surrounding the discharge of tax debt in bankruptcy are complex and depend heavily on the specific dates and codes found in your IRS transcripts. An experienced bankruptcy attorney can analyze this information to build the strongest possible case for you. If you’re ready to explore your options, don’t wait. Contact the Law Offices of Michael Schwartz to see how you can achieve a fresh financial start.