Proof of income is documentation that showcases how much you earn over a specific period. Renting a house and leasing a car are among the common scenarios in which one may be required to provide proof of income. Credit card companies, utility companies, and banks may also need income verification.
Income verification may also be a requirement in some visa applications. The documents required for proof of income vary based on your employment status. Outlined below are five quick ways to show proof of income.
- Pay stubs
Pay stubs are documents issued by employers summarizing an employee’s earnings. Pay stubs list the hourly wages earned or your salary, including commission pay, overtime, and tips. They’re the most popular way of proving income and can be provided in printed form or electronically. An employer can create a pay stub covering weekly, biweekly, or monthly pay. The document usually contains:
- General information, including personal identification details
- Gross earnings
- Pay period
- Tax deductions
- Voluntary and involuntary deductions
- Employee benefit deductions like retirement contributions and life insurance payments
- Net pay
A pay stub can help you prove your income when renting or leasing a property or applying for a loan. If you’re injured and unable to work, your pay stubs can be used as proof of income to calculate lost wages, ensuring you’re appropriately compensated.
- Annual tax returns
Your federal annual tax returns are a legal document recognized by the IRS (Internal Revenue Service) and a perfect way to show proof of income over one year. They provide a detailed overview of your financial position, including income, deductions, expenses, and credits. As a self-employed individual, your annual tax returns represent an official record of your financial transactions in a specific year.
- Bank statements
You can use bank statements as proof of income, particularly if you don’t receive conventional pay stubs or are self-employed. They provide the most current information regarding your business’s or individual income. Bank statements don’t just show your earnings; they also demonstrate how you spend your income. Your bank statement may contain various types of income streams, including:
- Self-employment
- Salary
- Welfare (money received from government programs)
- Investments such as cryptocurrencies, real estate or stock
With bank statements, you can provide a clear, in-depth overview of every withdrawal and deposit made in your bank account. When using bank statements to prove your income, ensure they’re certified.
- Annual pension statements
Annual payment statements are issued as Form 1099-R. They verify the income you receive from pension distributions and other income types. If you are receiving distributions, you should receive the 1099-R Form yearly during the tax period. For annual pension statements to be used as proof of income, they should:
- Clearly indicate your name and date
- The amount of your pension payments
- The pensions you’re in receipt of
- How regularly payments are made
- Proof of income letter
A proof of income letter is official documentation showing you’re employed and receiving a salary. This document can be used as supporting proof for acquiring a credit card, signing leases, or getting your loan approved. A proof of income letter should clearly state your basic income details, including workweek hours, wage per hour or annual income, and how you intend to improve or maintain your income in the future. Your employer or other relevant parties, such as the HR manager or accountant, can write the proof of income letter.
Endnote
Proof of income may be needed when leasing an apartment, applying for a visa, or loan approvals. You can show proof of income using pay stubs, bank statements, proof of income letters, annual pension statements, or annual tax returns.