Key takeaways
- A verification letter states the job, pay stubs show what was paid, and the IRS transcript shows what was reported.
- Form 4506-C goes through IVES and costs $4 per transcript.
- Line 6 and line 7 of Form 4506-C request different records, so read both before signing.
- The tax year 2026 Form W-2 is not due to employees until February 1, 2027.
Three documents answer three different questions
A verification letter is a statement from the employer about the job. It gives the title, start date, employment status, pay rate and pay frequency. It is only as reliable as the person who signs it, so lenders treat it as a starting point rather than proof on its own.
Pay stubs are the payroll record for each pay date. They show gross pay for the period, year-to-date gross, deductions and the pay date. They prove what was paid on those dates. They do not show the rate going forward, and they miss income paid outside payroll.
Form W-2 is the annual wage statement the employer gives the employee and files with the Social Security Administration, which shares the data with the IRS. A wage and income transcript is the IRS record of the information returns filed for that person. It is the only one of the three that the IRS itself will release, and only with the taxpayer's consent.
What a verification letter should contain
Build a template once and fill it from payroll, not from memory. The fields lenders and landlords usually check are the legal name as it appears on Form W-2, job title, hire date, employment status (full-time, part-time or per diem), current base rate and pay frequency, date of the last raise, year-to-date gross, and the employer's name, address and phone number.
For variable pay, add the history by year: overtime hours, commissions and bonuses for each of the last two calendar years, plus the amount expected this year. A letter that says base salary only will be questioned when the borrower's W-2s show bonus income.
Put the letter on letterhead, date it, and have the signer print a name and title. The signer must be someone who can see the payroll record. The request can read: "Please confirm the employment details below for [employee name] for a [mortgage or rental] application and return the signed letter by [date]." Keep the reply in the employee file.
What lenders and landlords usually ask for
Mortgage and business lenders usually ask for the verification letter, recent pay stubs, two years of W-2s, and a signed Form 4506-C so they can pull transcripts. Self-employed borrowers and those with bonus income also get tax returns. The exact list and periods come from the lender's program, so get them in writing before the file is assembled.
Landlords and property managers usually ask for recent pay stubs and an employment letter, and some ask for the prior year's Form W-2. The screening criteria belong to the landlord and should appear on the application. Ask for them before the employee pays an application fee.
Decision rules that save a round trip: if the employee is a salaried W-2 employee, send the letter and recent pay stubs. If income includes commission, tips or bonus, add the variable-pay history and the prior year's Form W-2. If the person is paid on Form 1099-NEC, payroll documents are the wrong package, and the lender will want the 1099s and bank deposits instead.
Form 4506-C: what the lender actually receives
Form 4506-C is the request a lender uses to get tax transcripts from the IRS through the Income Verification Express Service, or IVES. The IRS says the form is used to request tax return information through an authorized IVES participant, and it names mortgage lending companies, including banks, credit unions or others, as participants. The IRS only provides tax records to a third party with the consent of the taxpayer, so the employee signs the form.
Read both transcript lines before the employee signs. Line 6, labeled Transcript requested, is only for ordering tax return transcripts. Line 7, labeled Wage and Income transcripts, needs only the checkbox marked. A lender that needs wage data should be checking line 7. An employee who signs with the wrong line checked has authorized a different set of records.
The IRS charges $4 for each transcript requested. Wage and Income transcripts are charged by form type and number of taxpayers for each year requested. The IRS FAQ example is three Wage and Income forms with two taxpayers, which is six charges per year requested, or $24 per year at $4 each. Ask the lender which years and forms they need before anyone signs, because the charge grows with each one.
IVES registration takes about two weeks, according to the IRS FAQ, so a lender that is not yet registered will not be able to submit the request on the day the file arrives. IVES is built for lenders. If a landlord asks for a Form 4506-C, ask which IVES participant will submit it. If there is none, the employee should request a transcript with Form 4506-T.
Form 4506-T and Form 4506: the employee's own requests
Form 4506-T is the form an employee files to request their own transcripts. The IRS lists five types: tax return, tax account, wage and income, record of account and verification of non-filing. For a personal copy the online account is the fastest route. By mail, transcripts arrive in 5 to 10 calendar days, according to the IRS Get Transcript page.
Form 4506 is a different request. It asks for a copy of the filed tax return itself. Use it only when the lender asks for the return document, not a transcript. The IRS form page does not state a processing time, so do not promise the employee a date based on the form alone.
A transcript is not the Form W-2. If the employee needs the W-2 document, the employer should reissue it from the payroll system. That is usually faster than any IRS request.
What the employer should produce, and in what order
Keep a folder for each employee with the signed letter template filled from payroll, the last three pay stubs with year-to-date totals, the prior two years' Form W-2 as filed, a pay rate history with effective dates, a summary of overtime, commission and bonus by year, and the employer's name and address exactly as printed on Form W-2. Each item should come from the payroll system in under a day.
Timing matters in November. For a file built in late 2026, the most recent full-year Form W-2 is for tax year 2025. The Form W-2 for tax year 2026 must generally be furnished to employees by February 1, 2027, so a lender asking for two years of W-2s gets 2025 and 2024. Until then, pay stubs and the letter cover 2026.
Mask the Social Security number to the last four digits unless the lender's request names the full number. Send it through a secure portal, not in email. A verification letter should not carry the full number.
Failure modes and fixes
Name mismatch. The name on the pay stubs does not match the name on Form W-2 after a marriage or legal name change. Fix: get the name change record from the employee and state the prior name on the letter, so the lender reads the change instead of guessing.
Wrong line on Form 4506-C. The lender sends the form with the wrong transcript line checked. Fix: send it back before the employee signs, and have the lender reissue it with the correct line.
Incomplete Form 4506-C. The IRS says the form must be completed fully and correctly, then signed and dated by the taxpayer. A form with a missing date or name is not complete. Fix: the employee signs a fresh, complete copy rather than having someone fill in the gaps by hand.
Letter signed by someone outside payroll. A manager who does not see pay records signs a rate that is out of date. Fix: require a payroll or HR signer, and reissue the letter after every raise.