There are many tax documents that must be filed each year, but the 4506-T is different. It sends IRS transcripts of a person’s tax return information to mortgage lenders or other third parties. This document is used to verify all data on W2s, 1099s, and 1040s. In this manner, it serves as validation to underwriters. It is utilized to make sure tax returns used for loan purposes are legitimate.
The Beginning of Form 4506-T
The 4506-T began being used as an auditing tool for lenders to verify a person’s income. It became important after lenders started realizing a high number of citizens had two different sets of returns. One tax return was established to pay a low amount of taxes. Another return was completed to show lenders more income.
How to Make Sure Form 4506-T is Not Rejected
Many times, the IRS will not process a request for transcripts. This usually occurs when the address does not match the tax year on the form. A previous address must be placed on the fourth line of Form 4506-T. Other requests may be rejected when signatures are not legible.
A 4506-T waiver exists and is accepted by certain lenders under a few circumstances. If a person has non-taxable income and does not file a tax return, a waiver may be used. This usually occurs when a person lives off social security income or a pension. To qualify for this waiver, it is necessary to provide a social security awards letter.
Differences Between a 4506-T and a 4506T-EZ
A 4506-T is used to order IRS transcripts. A bank or other lending association uses this form as proof to avoid fraudulent behavior. This form can be used to request a business return transcript, transcript of an account, including payments, penalties, and adjustments, or a record of account.
Form 4506T-EZ, a similar document, cannot be utilized by individuals who file Form 1040 in a fiscal tax year. People can use this form to request a tax transcript that includes most lines from the original return. It will not list payments, penalty assessments, or original file adjustments. Also, line five can be used to send a transcript to a third party.
Requesting a Transcript
When filing Form 4506-T with the IRS, it must be signed and dated correctly. It is valid for 120 days. A person may send the form directly to the government, but it may take 10 to 60 days to receive the information.
It is possible to file electronically with an IRS bulk vendor. In this case, a person will receive transcripts quicker. Typically, it takes 24 to 48 hours to process a request.
Form 4506-T is a serious document that must be completed correctly. It discloses confidential information to outside parties and is vital for anyone looking to secure a mortgage.