Tax transcripts and tax returns both show information about your tax year, albeit in different formats. Transcripts are essentially summaries, showing only the important data on your return with little by way of explanation. A tax return, on the other hand, is a complete physical description of your tax situation. You can get copies of both returns and transcripts from the Internal Revenue Service. Whichever form you prefer will depend on your needs.
Your tax return is the document you submit when you file your taxes. A complete tax return contains not just the summary tax form you file, but also all of the supporting schedules and forms. For example, if you file a Form 1040, your tax return may possibly include not just the two-page 1040, but also a Schedule A for itemized deductions, or a Schedule D for capital gains and losses.
Tax Return Transcript
A tax return transcript is one of the two types of tax transcripts you can get from the IRS. After you file your tax return, IRS computers scan the information into a format that strips down your return into just the summary numbers on your return. For example, if you file a Schedule A with your return, you must list every specific deduction you are taking for the year. While all of this individual information will appear on your tax return, the tax return transcript will only reflect a line showing your total itemized deductions. Since the tax return transcript uses IRS terminology and lists hard data in a format very different from a tax return, it can be more difficult for taxpayers to understand than a traditional tax return.
Tax Account Transcript
A tax account transcript is the second type of tax transcript you can get from the IRS. The tax account transcript does not reflect the information from your tax return, but rather the up-to-date status of your liabilities and payments to the IRS, including any IRS adjustments. For example, if your return shows an amount due of $10,000, you may choose to set up an installment plan with the IRS to pay off those taxes over time. Your tax account transcript will show the original amount due, along with any payments you have made and the current balance due.
The IRS allows you get copies of either type of tax transcript at any time for free. You can either use a form on the IRS website or call 1-800-908-9946 to request transcripts. If you want a hard copy of your actual tax return, you can still get this from the IRS, but you must pay a fee of $57. For some financial transactions, such as applying for a home loan, your potential lender may accept a simple transcript. However, others may prefer a copy of your actual tax return.