A tax return transcript shows you line-by-line what items are on the original tax return, including any tax forms or schedules that accompanied it. You can get a copy from the Internal Revenue Service, or IRS, for no charge. Anything involving taxes tends to be complex and difficult to understand, and unless you are a tax professional, you may need help comprehending a tax return transcript. However, if you follow a few steps, you can understand how the transcript is organized and what things to check for to ensure that you're not paying too much in taxes, or are getting enough back in a refund.
Check the top right corner of the transcript, which lists the request date and response date. Check the IRS Employee Number to make sure it is accurate.
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Check the information directly below that, which should show your name, address, filing status and any dependents you may have.
Review the income information. This section lists all of your wages, whether it be from your regular job, income from a business or capital gains (or losses), among other sources of income. Check each line to make sure the IRS has accurately represented how much you make; if they've listed too much, you could be paying more taxes than you owe.
Look over the adjustments-to-income section. This section lists all the tax deductions you are entitled to, which reduces your tax liability.
Review the taxes and credits section carefully. This is where the IRS tells you what you owe. Go over each line item to ensure that the charges are valid. You may want to contest an item if you feel the IRS has inappropriately taxed you for something you never received or for which you don't think you should be taxed.
Examine the payments section, which lists taxes that your employer withheld and any payments you have made.
Go to the "Refund or Amount Owed" section, which will total everything up from the previous sections and tell you how much you owe or whether you are entitled to a refund.
Proceed beyond that section if you own a business to review the income and expenses you recorded for your business. Check over each item to verify its validity.