How to Read and Understand Your IRS Transcript or Tax Return

Written By Kirsten Toler

Tax season may be over, but understanding what you filed is just as important as filing it. Whether you're reviewing your return for accuracy, applying for a mortgage, or trying to make smarter financial decisions, knowing how to read your IRS transcript and tax return gives you clarity and control.

Let’s walk through what you need to know to make sense of your IRS records, avoid surprises, and stay proactive with your tax planning. 

Overview: What Is an IRS Transcript and When Do You Need It?

An IRS transcript is a summary of your tax return and account history. You can request one for free at IRS.gov, and it’s often used for:

  • Confirming that a return was received and processed

  • Verifying income for loans or financial aid

  • Responding to an IRS notice

  • Checking for errors or identity theft

  • Filing prior-year or amended returns

There are several types of transcripts, each serving a different purpose.

Types of IRS Transcripts Explained

Here are the four most common transcript types:

  1. Tax Return Transcript – Summarizes the key information from your filed return (1040) and is often required for loans or student aid.

  2. Tax Account Transcript – Includes basic return data along with any adjustments made after filing (like penalties, interest, or payments).

  3. Record of Account Transcript – Combines both the return and account transcript into one document.

  4. Wage & Income Transcript – Lists information the IRS has on file from third parties: W-2s, 1099s, interest statements, etc.

How to Read Key Sections of Your Tax Return (Form 1040)

Form 1040 is the heart of your annual tax return. Understanding a few key lines can help you track your income, deductions, and refund:

  • Line 1: Wages, Salaries, Tips – Income from your W-2 jobs

  • Line 8: Other Income – Freelance work, unemployment, or rental income

  • Line 11: Adjusted Gross Income (AGI) – Total income minus adjustments like retirement contributions or student loan interest

  • Line 15: Taxable Income – What’s actually taxed after deductions

  • Line 22: Total Tax – Your tax liability before credits

  • Line 33: Total Payments – What you’ve already paid via withholding or estimated taxes

  • Line 34: Refund – If your payments exceeded what you owed

  • Line 37: Amount You Owe – If you didn’t pay enough during the year


Tips for Reviewing Your IRS Transcript

Your tax transcript includes IRS transaction codes that indicate actions taken on your account. Here's what to look for:

  • Code 150 – Tax return filed

  • Code 846 – Refund issued

  • Code 570 – Additional account action pending (often a flag for further review)

  • Code 971 – Notice issued (usually corresponds to an IRS letter you’ll receive)

What to check:

  • Make sure your income matches your records (W-2s, 1099s, etc.)

  • Verify any credits or payments applied

  • Look for unknown activity that could signal errors or fraud

Common Errors and Issues Found on Transcripts

Even if you used a tax professional or software, mistakes can happen. Watch for:

  • Incorrect filing status or dependent claims

  • Missing income (especially from 1099s)

  • Delayed or adjusted refunds

  • Unapplied payments or misposted estimates

  • Unexpected penalties or interest

Catching these early allows you to address problems before the IRS does—and potentially avoid costly notices or interest.

Best Practices for Managing Your Tax Records

To keep your tax life smooth and audit-ready, adopt these habits:

  • Save a copy of your tax return and transcript each year for reference

  • Use a secure portal or folder to organize digital files

  • Schedule a mid-year tax checkup to update withholdings, review income changes, or plan deductions

  • Work with a trusted CPA to review transcripts and returns for accuracy


Final Thoughts

Understanding your IRS transcript and tax return doesn’t require an accounting degree—it just takes a bit of guidance. By reviewing your filings and transcripts after tax season, you’re taking a smart step toward proactive financial management.

Need help pulling or interpreting your transcript? We’re here to help. Whether you’re preparing for next year or troubleshooting an IRS notice, we’ll walk you through every line with confidence.

 
View fullsize It’s easy to look around and feel like you’re behind; like everyone else is moving faster, achieving more, or has it all figured out. But here’s the truth: progress is personal, and there’s no one “right” pace for
View fullsize 🚩 IRS red flags aren’t always a sign of wrongdoing, but they can get you noticed. At KMT Consulting, we believe tax season doesn’t have to feel like a guessing game. Learn the warning signs, file with intention, and stay audit-ready yea
View fullsize "Doing your best" won’t look the same every day. Some days, you’re in the zone, checking off every task. Other days, just showing up takes all your strength. Both matter. Progress isn’t always loud. Be proud of the quiet
View fullsize Running a business from home? Here’s a financial detail too many entrepreneurs overlook. Here’s what many don’t realize: ✅ Rent is a legitimate business expense ✅ You can deduct a portion of your home costs—including rent,
Kirsten Toler
Next

How to Handle Business Tax Audits: Steps for Staying Prepared