Tuesday, November 12, 2013

4 Facts About Obtaining Your Past Taxes Returns–And Saving Big!


Banks love financial documents. Loan providers love them too. Renters and real estate agents are also big fans. The fact is, the more financial documentation you have, the more those kinds of places can see what sort of a risk you are. And even if you had an off year (or two) the more documentation you provide to prove what a low risk you are, the lower your rates are going to be. One easy way to give them the records they crave? Obtain your past taxes returns.
How? Here are 4 facts about getting your past taxes returns so you can cut your bills, save some money, and be ready for any crises that come your way.
    Know what you’re getting. There are two types of documents that gives you your past taxes returns information: a tax returns transcript and a tax account transcript. A tax returns transcript just shows what you filed to the IRS, without any changes. A tax account transcript shows what changes you or the IRS made after you filed. Both have their pros and cons, but make sure you ask for the right one. For the most part, when your past taxes returns information, a tax returns transcript is all you’ll need. Of course, you can always ask for both.
    Decide who you’re going to get it. There are three ways to get your past taxes returns information: call the IRS, mail the IRS, or contact your tax preparer. Each option has their benefits, but it’s important to keep in mind the time frame. While mailing may seem slower, contacting the IRS by phone may just add another step to the process. Likewise, your tax preparer might have a long turnaround time. Keep these things in mind before you put in your request–and always plan several months ahead!

    Know what you’re not getting. If you go through the IRS to get a transcript, what you’re not getting is a straight copy of your past taxes returns–instead you’re just getting a record of what they received. A straight copy from the IRS will cost you per each tax year you’re requesting. A copy of your past taxes returns from your preparer should be cheaper to obtain, but might take longer.
    Plan ahead. Of course, the fastest and best way to get your past taxes returns information is to just make a copy before you file each year. This might mean a few hours at copy shop or printing out a long PDF if you e-file, but the time (and money!) it will save you in the future is well worth it.

How to Get a Transcript or Copy of a Prior Year Tax Return


One of the often made requests to our office is how to get a copy of prior year tax returns and information. In some cases, it’s related to an IRS inquiry or the need to amend a prior year tax return. But it may also be required for a new job application or to prove income for a loan application. No matter the reason, if you don’t have a copy yourself, it’s likely you’ll be able to get one from the IRS. Here’s how to get your federal tax return information from the IRS:
    Transcripts include all the information on your return and all the information provided to the IRS from employers, lenders and others. These documents are free and you can get them for the current year and the past three years. In most cases, a transcript includes all the information you need.
    Your tax attorney can often get copies of your transcriptions for many years further back if you’ve authorized them to do so with IRS Form 2848 Power of Attorney.
    A tax return transcript shows most line items from the tax return you originally filed. It also includes items from any accompanying forms and schedules you filed. However, it does NOT reflect any changes made after you filed your original return. So if you amended your return, that information will not be on the Return Transcript.
    A tax account
    Transcript shows any changes either you or the IRS made to your tax return after you filed it. This transcript includes your marital status, the type of return you filed, your adjusted gross income and taxable income.
    You can get transcripts on the web, by phone or by mail. To request transcripts online, go to IRS.gov and use the Order a Transcript tool. To order by phone, call 800-908-9946 and follow the prompts.
    To request an actual copy of your tax return (Form 1040, 1040A or 1040EZ) by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.
    If you order online or by phone, you should receive your tax return transcript within five to 10 calendar days. You should allow 30 calendar days for delivery of a tax account transcript if you order by mail.

    If you need an actual copy of a filed and processed tax return, it will cost $57 for each tax year. Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and past six years. The IRS will usually complete a request within 60 days.

Find Copies of Past Tax Returns


Do you need a copy of your past tax return? If so, you should first decide if you need an exact copy of your return or just a simple transcript. Many taxpayers are unaware that there are differences between exact copies and transcripts. Along with this, the process of getting an exact copy of a past tax return is much different than requesting a transcript.
To obtain an exact copy of your past tax return, follow these 3 basic steps:
1. To receive an exact copy of a past tax return, you must use IRS Form 4506 (Request for Copy of Tax Return). This is an easy, 1-page for
m that should only take you a few minutes to complete. Most of what you are asked to provide is basic identifying information.
2. You must send a check or money order with Form 4506, made payable to the “United States Treasury.” It costs $57 for each past tax return copy that is requested. (If the IRS cannot find your tax return, they will refund that fee.)
3. Mail Form 4506, along with payment for each tax return copy, to the address provided. The address you must use is based on your state ― mailing addresses can be found on Page 2 (General Instructions) of Form 4506.
Note that if your filing status is “married filing jointly,” either spouse can request an exact copy of a past tax return. In that situation, only one signature will be needed.
In some cases, it may make more sense to get a transcript of a past tax return rather than an exact copy. If you need access to your personal tax information, obtaining a copy of a past tax return costs $57 per return. Requesting a transcript, however, is simpler and free of charge.
There are two different types of tax transcripts:
Tax Return Transcript
This document will show most of the original information from your past tax return, but it is not an exact copy. Keep in mind that a Tax Return Transcript will not show any changes that may have been made after submitting the original tax return ― for example, if you filed Form 1040X (Amended U.S. Individual Income Tax Return). This type of transcript is typically used by people who are applying for a loan, such as a school loan or a car loan.
Tax Account Transcript

This type of document shows basic information, such as your filing status and adjusted gross income (AGI) from a past tax return. Similar to above, this transcript is not an exact copy. However, a Tax Account Transcript will include any adjustments that were made after the original return was filed.

How to Get a Transcript or Copy of a Prior Year Tax Return


There are many reasons why your clients should ketax return, the IRS can provide a copy or give them a transcript of the tax information they need.
ep a copy of your federal tax return. For example, they may need it to answer an IRS inquiry, apply for a student loan or a home mortgage. If you or your clients can’t find their
Here’s how to get your federal tax return information from the IRS:
    Transcripts are free and you can get them for the current year and the past three years. In most cases, a transcript includes all the information you need.
    A tax return transcript shows most line items from the tax return you originally filed. It also includes items from any accompanying forms and schedules you filed. It does not reflect any changes made after you filed your original return.
    A tax account transcript shows any changes either you or the IRS made to your tax return after you filed it. This transcript includes your marital status, the type of return you filed, your adjusted gross income and taxable income.
    You can get transcripts on the web, by phone or by mail. To request transcripts online, go to IRS.gov and use the Order a Transcript tool. To order by phone, call 800-908-9946 and follow the prompts.
    To request a 1040, 1040A or 1040EZ tax return transcript by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.
    If you order online or by phone, you should receive your tax return transcript within five to 10 calendar days. You should allow 30 calendar days for delivery of a tax account transcript if you order by mail.
    If you need an actual copy of a filed and processed tax return, it will cost $57 for each tax year. Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and past six years. Please allow 60 days for delivery.
    If you live in a Presidentially declared disaster area, the IRS may waive the fee to obtain copies of your tax returns. Visit IRS.gov and select the ‘Disaster Relief’ link in the lower left corner of the page for more about IRS disaster assistance.

    Forms 4506, 4506-T and 4506T-EZ are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

IRS Changes ITIN Procedure


The other week I wrote about changes the IRS has recently put into place that makes it harder for you to get a Tax ID number for your business. Now, the Service has made changes to how non-US residents can get an individual taxpayer identification number,
also called an ITIN. And if you’re looking to come to the US to go to school, or if you are looking to invest in US-based real estate, you need to know how this affects you.
When you earn income in the United States as a non-resident, the government here expects that you will pay some tax on that money. To make sure that happens, the government nominates the person or business paying as a ‘withholding agent’, and makes that person or business responsible for holding back a portion of your income. The holdback amount is typically 30% but it can be higher. The withholding agent isn’t going to let it slide, either, because the IRS makes them responsible for paying it, in the event that you don’t.
As a non-resident, you can either leave it at that, or, if you want, you can voluntarily enter the US tax system, by filing a non-resident tax return. The advantage is that if you come into the US tax system you’ll get a lower tax rate, and you won’t be stuck with that mandatory 30% withholding.
If you do choose to come into the US system you’ll need some kind of a number that identifies you to the US tax authorities. If you’re a US citizen, that is a Social Security Number. Most non-citizens, who aren’t eligible for Social Security Numbers, apply for ITINs. And that’s where the fun starts.
The biggest issue the IRS has with issuing you an ITIN is making sure that you are who you say you are.
Up until recently, if you were in the United States, either going to school or in the country temporarily, looking at real estate, it was pretty simple. You got a copy of your passport notarized by a US attorney, and sent that to the IRS, along with your application.
That shortcut has just changed, though. Effective immediately, the IRS is now demanding that everyone who wants an ITIN must submit a passport (or other qualifying documents) that has been certified by their home government agency that issued the passport.
If you’re in the United States, you may be able to get this taken care of at your closest Embassy or Consulate office in the US. If you’re outside the country, you’ll have to go to your passport office to get your passport certified, unless you live in a country that is a signer to a part of the Hague Convention that deals with standardizing document signing procedures (you can read more about it here). Apostilling is another method of certifying documents. A notary who can apostille documents is essentially a “super-notary”, who is permitted to take the government’s place and certify your documents. If you’re in a Hague country, it’s usually cheaper to go the apostille route than back to your passport office.

On the face of it, yes, it does sound like a lot of work. But if you’re going to save 20% or more on your US-based taxes, then it’s going to be worth it in the long run.