Tips & Special Topics
VA Loans - IRS Form 4506-T
Added October 14, 2010 | Updated October 14, 2010
Many VA-approved mortgage lenders will ask borrowers to complete IRS Form 4506-T, Request for Transcript of Tax Return. The purpose of the form is to authorize the lender to receive a transcript of the borrower’s tax return.
A tax return transcript is different than simply a copy of the borrower’s tax return. The transcript will provide information a tax return does not, such as financial standing of the borrower’s IRS account. Status of payments, penalties, assessments and adjustments after the return was filed gives lenders a clear picture of a borrower’s standing with the IRS.
With a completed Form 4506-T, lenders may have access to transcripts of personal or business tax filings by form type (1040, 1040EZ, 540, etc.) for the current year and up to three years prior. If a borrower did not file a tax return for a certain year, Form 4506-T will provide verification of borrower’s non-filing. Also, IRS forms like W-2, 1099 series and 1098 series, as well as 5498 series transcripts that are sometimes filed with a tax return will be made available to the lender when a borrower submits Form 4506-T.
When a borrower is asked to complete the form, it is important to know what is being requested. The basic information being requested includes:
• Name(s) on tax return
• Social security number(s) (enter in the same order as filed on joint returns)
• Current name and address
• Address used for last return
• Name, address and telephone number of third party (such as a mortgage company) to receive transcripts
• Checklist of tax products requested (most common to check all)
• Year-ending dates of transcripts requested
• Signature of taxpayer, spouse (if filed jointly), or authorized corporate party
• Date
Much of the information requested on Form 4506-T is self-explanatory. Borrowers should be able to enter the majority of the information with the instructions provided on the form.
The portion of the form that may require additional explanation is the checklist of tax products. Completion of this section allows lenders access to a borrower’s IRS status of payments, penalties, assessments and adjustments after a return is filed. By checking all boxes, a borrower gives a lender authorization to a see all corresponding products. Oftentimes the lender will ask the borrower to check all boxes, so all the necessary information is released.
Borrowers should know that submission of Form 4506-T pertains to only one type of tax return, such as IRS Form 1040 or IRS Form 540. Therefore, multiple submissions of Form 4506-T may be necessary to obtain all of the borrower’s required tax transcripts. A seasoned VA home loan professional will be able to assist with any questions regarding this matter.
For more information about the VA loan process and the forms associated with it like IRS Form 4506-T, contact a VA home loan specialist.
