“Are tax transcripts showing income better than tax returns to submit proof of income?”
IRS tax transcripts are better proof of income because providing you tax return alone does not actually prove that they’ve been filed with the IRS or that you paid any taxes. Anyone can fill out a 1040 in 5 minutes online. So that’s not really strong evidence of income. IRS transcripts are actually from the IRS, Internal Revenue Service, and they show documented income that’s been filed with the IRS.
If you provide your tax returns instead of transcripts, you’ll also want to provide bank statements, pay stubs, pay statements, your W2s, or 1099s if you’re a contract worker. If you’re a business owner, it’s a little more involved. You’re going to want three years of tax returns. We also recommend six months of bank statements.
Tax transcripts are free, and you can order them online through the IRS website. It usually takes 45 business days to obtain your transcripts.