If you’re an attorney or financial institution, such as a bank, credit union, or mortgage lender, you may benefit from a recap of how 4506-Transcripts can help you. IRS provides wage-income transcripts, including W-2 earnings over the past 10 years, mortgage-bank interest paid-received, retirement income distributions, and 1099 income in the 4506-Transcript.
Verifying the client’s earnings and income are an essential part of the verification, underwriting, quality control, or risk management process at most financial institutions and professional services firms.
The 4506-Transcript assists with financial or legal fraud protection and can help:
• Financial institutions to underwrite a mortgage or close a loan faster.
• Divorce attorneys to verify and establish a client’s income needed to finalize demands for spousal or custody support.
• Bankruptcy attorneys to verify the client’s income and earnings in a Chapter 7 or Chapter 13 petition.
• Confirm information identified in a public records or background search.
It is also possible to request the client’s line-by-line transcript from IRS for the past four years. The 4506-Transcript provides income reported and spouse and/or dependents’ information from the client’s personal tax return or corporate tax return. The 4056 line-by-line transcript includes:
• 1040 tax return
• 1065 partnership income
• W-2 wage and tax statement
• 1098 mortgage interest, tuition statements, student loan interest
• 1099 miscellaneous income, cancellation of debt, dividends-interest, government payments
• 1120 (also 1120L, 1120S) corporation income tax
• 5498 Medicare Advantage MSA, Individual Retirement Account, Archer MSA, HSA, Coverdell ESA contributions