This is one of the most underused tools available to tax preparers, and it can prevent the most common source of IRS notices.
What It Is
A wage and income transcript shows every information return (W-2, 1099, K-1) that was filed with the IRS for a specific taxpayer in a given year. It’s the IRS’s record of what employers, banks, brokerage firms, and other payers reported.
Why It Matters
The most common IRS notice your clients will receive is the CP2000, which means the IRS found a discrepancy between what’s on the return and what was reported to them by third parties. In most cases, this happens because the client forgot to give you a 1099 or had income they didn’t mention.
Pulling a wage and income transcript before you finalize the return lets you compare what the client gave you against what the IRS has on file. If there’s a 1099 on the transcript that the client didn’t provide, you address it before filing rather than dealing with a CP2000 six months later.
How to Get One
You can pull transcripts through your professional tax software (most major platforms have a built-in transcript request feature) or through the IRS e-Services portal using your Centralized Authorization File (CAF) number. If you’re using Form 4506-T, the paper request route takes longer.
The fastest method is through your software. The client authorizes you to access their transcript, you submit the request, and in many cases you’ll have the document within minutes.
When to Use It
Pull a transcript for every new client. They may not remember every 1099 they received. They may have switched jobs mid-year and forgotten about a small W-2. They may have investment accounts that generated interest or dividends they weren’t tracking.
For returning clients with stable income situations, it’s less critical but still good practice if anything about their year looks different.
The Client Conversation
Tell your clients you pull transcripts as part of your process. It signals that you’re thorough and that you’re protecting them from preventable notices. It also catches situations where a client deliberately omits income, which protects you as the preparer.
For training on transcripts, IRS tools, and building a bulletproof preparation process, visit musespring.com.