What does signing an auto loan, renting an apartment, completing your taxes, and refinancing a mortgage have in common? These are all situations when you might need to show proof of income.
If you’re wondering how to show proof of income, keep reading below!
Ways to Show Proof of Income
Proof of income is used to ensure that you have the ability to pay for a good or service. For example, a mortgage lender might require proof of income to make sure that you can keep up with your monthly mortgage payments.
Whatever document you provide should contain the following:
- Your name
- The amount of money that you earn
- Proof of employment, if applicable
- The date
Listed below are some of the most common ways to show proof of income.
Pay stubs are a go-to option for many people who have to provide proof of income. A paystub has all the necessary information: your identity, your employer’s identity, and the amount of money that you make.
If you choose to use a pay stub, make sure that it is recent. This will provide the most accurate and up-to-date information on your employment status and income stream.
Some websites allow you to create your own pay stub samples. If this interests you, you can browse for some examples of paycheck samples online.
Proof of Income Letter
You can ask your employer to provide a proof of income letter for you. This letter should contain all the necessary information listed above (your name, your employer’s name, the date, and the amount of money that you make).
Proof of income letters are good for people who are applying for large loans or things like mortgages. In a letter, your employer can vouch for your trustworthiness. This might give you a better chance of getting a loan.
You can use the previous year’s tax returns to demonstrate your income. If you choose to use tax documents, look for a form 1040 (your tax returns) or a form W2 (a wage and tax statement from your employer).
Social Security Benefit Verification Letter
If you receive Social Security, you might be unsure about how to prove income. If you don’t have an employer who can provide you with a traditional pay stub or tax documents, you can go online and request a letter with information about your monthly Social Security payments.
Unemployment Compensation Letter
Like people who receive Social Security, people who receive unemployment benefits might not be able to provide a traditional pay stub. If this is you, don’t worry. You can request an unemployment compensation letter from your local unemployment office. This letter will detail the amount of money you receive in benefits.
Take Control Of Your Finances
Providing proof of income is an important step in signing a lease, buying a car, or completing your taxes. By learning about proof of income, you’ve committed to taking control of your financial future.
To learn more about financial wellbeing, check out our finance blog. We cover topics like personal financial management, car loans, and more!