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IRS makes it easier to send tax data to lenders

You can order your tax transcripts and copies of returns online. Transcripts are free, but those copies will cost you.

By Kay Bell Feb 8, 2011 12:35PM

Everyone's hoping that the housing market will at least begin to recover in 2011. And it looks like that might just happen. Sales of existing homes in December 2010 grew at their fastest pace since May 2010.

 

Where home prices are still dropping, Housing Predictor says its data show the values are deflating at a slower rate for the second year in a row. And now there are indications that as many as 17 states, primarily in the Midwest and  Northern-most parts of the country, will see home prices rise in 2011, demonstrating, says Housing Predictor, that housing markets are recovering.

 

If that indeed does come to pass and you're in the market for a new place to live, you'll need your tax information when you apply for a loan.

 

Lenders used to want several years of tax returns to show that you had a solid earnings history. That practice was eased in the crazy "everyone must buy a home" era that led to the housing bubble that burst and tanked our whole economy.

 

Now, I hope, they're being more diligent before doling out mortgages.

 

The IRS is making it easier for you to get the tax data that your lender wants with an online tool for ordering tax transcripts and tax return copies. 

 

Asking the IRS for info

 

You've always been able to order this information by phone (1-800-908-9946) or by sending in the paper form for exactly what you and your mortgage broker want:

  • 4506T-EZ, Short Form Request for Individual Tax Return Transcript, for a tax return transcript (also in Spanish). 
  • 4506T, Request for Transcript of Tax Return, for a business, partnership or individual tax account transcript. 
  • 4506, Request for Copy of a Tax Return, which will get you an exact copy of a previously filed and processed tax return and all attachments, including W-2s.

But now you can do the asking electronically at Order a Transcript. Just enter your Social Security number or your IRS individual taxpayer identification number, your date of birth and your full street address with Zip or postal code.

 

What do you need?

 

A transcript is a computer printout that shows most of the line items found on your tax return when you filed it, including any accompanying forms and schedules. When it comes to verifying income, a transcript often is an acceptable substitute for a copy of your original tax return.

 

However, any changes made after the return was filed will not be reflected on a basic transcript. For that you need a tax account transcript.

 

A tax account transcript will provide any adjustments you or the IRS made after you filed your return. Like the basic tax transcript, the tax account transcript also shows things such as your marital status, type of return filed, adjusted gross income and taxable income.

 

The most complete info request is for exact copies of your previous filings.

You can have a transcript sent directly to your lender, who should get it in about 10 days after you submit your request.

 

Even better, there's no cost to order your current-year transcript, as well as transcripts for the past three years.

 

But if you need exact copies of your old tax returns, that will take up to 60 days to process.

 

It also will cost you $57 for each copy. If that price won't get you to set up a tax record keeping system, nothing will!

 

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