Collecting Client Financial Data
When accessing your clients’ financial records, transparency and accuracy are everything. Whether you’re reviewing documents for a loan application or advising your client on their tax liabilities and deductibles, incorrect or outdated information will skew your metrics and degrade your ability to make an informed decision.
Many lenders and CPAs have historically relied on tax returns to inform them on their clients’ financial portfolios. However, obtaining tax data via client-shared tax returns is not the most fail-safe method when it comes to ensuring your insights are as accurate as possible.
So, what is the better option?
Tax Transcripts.
Transcripts offer a more trustworthy and potentially more accurate snapshot of your clients’ finances, enabling you to provide exceptional service and make well-informed decisions.
Many lenders and CPAs have historically relied on tax returns to inform them on their clients’ financial portfolios. However, obtaining tax data via client-shared tax returns is not the most fail-safe method when it comes to ensuring your insights are as accurate as possible.
So, what is the better option?
Tax Transcripts.
Transcripts offer a more trustworthy and potentially more accurate snapshot of your clients’ finances, enabling you to provide exceptional service and make well-informed decisions.
Tax Transcripts vs. Tax Returns
Here are some of the key differences between Tax Transcripts and Tax Returns:
Why Are Transcripts More Advantageous For Lenders?
When it comes to assessing and mitigating borrower risk, verifying that the information that lenders have on borrowers’ finances is updated, accurate, and complete is imperative. If information is slipping through the cracks, this could mean losing money, damaging your reputation, and potentially even compliance crises.
Most importantly, tax transcripts provide lenders with a sense of security, knowing the records they’re accessing are official and tamper-proof. Because they are distributed directly from the IRS, lenders can trust the information they’re receiving is accurate. With tax returns, borrowers can easily conceal or alter aspects of their portfolio.
Additionally, transcripts offer a clean, concise breakdown of all the necessary information. Tax transcripts aggregate key data like adjusted gross income, taxable income, and filing status in a standardized format that makes the reviewing process simpler than shuffling through multi-page tax returns.
Most importantly, tax transcripts provide lenders with a sense of security, knowing the records they’re accessing are official and tamper-proof. Because they are distributed directly from the IRS, lenders can trust the information they’re receiving is accurate. With tax returns, borrowers can easily conceal or alter aspects of their portfolio.
Additionally, transcripts offer a clean, concise breakdown of all the necessary information. Tax transcripts aggregate key data like adjusted gross income, taxable income, and filing status in a standardized format that makes the reviewing process simpler than shuffling through multi-page tax returns.
Why Are Transcripts More Advantageous For CPAs?
For CPAs, tax transcripts offer several key advantages over client-provided tax returns, particularly when accuracy, compliance, and efficiency are essential. Since transcripts are issued directly by the IRS, CPAs can trust that the data reflects what was actually filed, avoiding issues with clients submitting drafts, amended returns, or incomplete documents. This verified accuracy is especially valuable during audits, financial reviews, or when preparing documentation for lenders.
The streamlined format of tax transcripts also makes it easier to compare multiple years of filings efficiently, helping CPAs identify inconsistencies, missing returns, or amendments quickly.
Finally, transcripts support accurate tax planning. CPAs can rely on them to confirm prior-year data for estimating payments, tracking carryovers, and planning contributions.
The streamlined format of tax transcripts also makes it easier to compare multiple years of filings efficiently, helping CPAs identify inconsistencies, missing returns, or amendments quickly.
Finally, transcripts support accurate tax planning. CPAs can rely on them to confirm prior-year data for estimating payments, tracking carryovers, and planning contributions.
How Can TOD Help Lenders and CPAs Obtain Tax Transcripts?
TOD’s platform supports ongoing tax transcript monitoring, providing real-time alerts for changes in a borrower’s tax profile, such as new tax liabilities or authorization failures, helping lenders make informed decisions, proactively manage risk, streamline workflows, and maintain compliance. Our system also includes intuitive dashboards, search and filter functions, and export capabilities that make it easy to manage large portfolios efficiently.
Curious how TOD could Support your goals?
Contact our partnership team today to learn more about how TOD can help both lenders and borrowers become more efficient, accurate, and trustworthy.