All About Wage and Income Transcripts
If you still haven't filed your 2025 taxes, there's still time left and you may actually be in a better position to file your taxes accurately now. That's because the IRS has released tax year 2025 Wage and Income Transcripts, which you can access if you have an online IRS account. You can access your IRS transcripts, or set up an online IRS account to do so at irs.gov/transcript.
What is a Wage and Income Transcript?
Wage and Income Transcripts are where you can find the information about who paid you money and reported it to the IRS throughout the year. This includes your work, whether on a W-2 or a 1099-NEC/MISC.
But it also includes other money you may have received throughout the year including Social Security benefits (on Form SSA-1099), gambling winnings (on Form W-2G), retirement or pension payments (on Form 1099-R), unemployment compensation (on Form 1099-G), and many other types of reported income.
Why should you care about what's on your Wage and Income Transcript?
One of the main ways the IRS determines whether you reported and paid the amount of tax they think you should have is by checking what you put on your tax forms and what they see on your Wage and Income Transcript.
If the IRS see entries on your transcript showing you received money that you didn't report on your tax forms, they will assess you a higher tax based on the additional income which can change the amount of refund you should have gotten for that year.
This process is called the Automated Underreported Program (of AUR) and is a type of audit conducted by IRS computer systems.
Because the AUR audit usually happens 1 or 2 or years after the taxes have been filed and you already got your refund for that year, this usually means that the IRS is telling you that you owe the refund back with interest and penalties.
Furthermore, the IRS computers don't do any checks to see if you ACTUALLY received the money that the Wage and Income Transcript says you did.
With Identity Theft becoming a more prevalent issue, it is not uncommon for identity thieves to use someone's personal information to apply for unemployment compensation or otherwise earn money under someone else's identity. This income can show up in an innocent taxpayer's Wage and Income Transcript and then result in a debt getting put on the innocent taxpayer!
Checking your Wage and Income Transcript before filing your taxes can help prevent both these cases.
First, you can check to make sure you are actually reporting all the income you received last year correctly so you don't get subjected to an AUR audit down the line.
Additionally, while retirement payments and unemployment compensation usually have tax withheld from them that isn't always the case. You can check the 1099-R (retirement distributions) or 1099-G (unemployment compensation) on your Wage and Income Transcript to double check that the correct amount of tax was withheld. Remember, even if tax was taken out of your unemployment or retirement benefits, you still need to include that income on your tax return!
Finally, if you see income on your Wage and Income Transcript that you didn't receive, you can act to resolve the situation before the IRS computers start saying you owe tax for income that might be the product of identity theft.
If you check your Wage and Income Transcript and see something you don't recognize or doesn't make sense, we can help you figure out if it might be an issue. Call our intake at 215-981-3800 between 9:30am and 12pm Monday through Thursday or apply online at philalegal.org.
