What Documentation Serves as Proof of Income?
Updated on July 2, 2021 | by Alex Smith
Wondering which documents serve as proof of income?
This information is important to know especially if you plan to rent a new apartment, buy a car, or apply for a loan. Some companies are extremely strict with what they’ll accept for income verification, so you may be denied without the right paperwork.
Fortunately, understanding what counts as proof of income documentation is pretty straightforward. Here’s a clear answer for you.
What Is Proof of Income?
As the name implies, proof of income is how a potential lender or landlord verifies how much money you make.
This detail comes in handy when they determine which type of loan or home you may qualify to rent (and even at what interest rate). People are often accepted or denied based on this information.
Certain documents are official for providing this type of information. Others, such as showing your mobile banking app or how much you have in savings, may not cut it and help you manage and increase savings.
Every time you get paid, your employer should give you a digital or paper copy of your paystub. In some states, such as California, it’s legally required that they do.
Your pay stub contains important information a lender or landlord can use to verify your income. It shows how much you bring in on a monthly or biweekly basis, as well as how much you’ve made to date that year.
For self-employed people and businesses, you can use an online paystub creator to generate one of these official documents.
Bank statements detail the last 30 to 90 days of your transactions and received income. Some lenders will accept a simple printed-out copy (with verification from your bank that it’s really you) in lieu of other forms of income verification.
Keep in mind, bank statements don’t always cut it. For example, you may not be able to lease or buy a car by providing bank statements alone.
Federal Tax Return
Last year’s federal tax return—so long as you submit it in time and it’s approved—is another acceptable form of proof of income. Your tax return shows how much you made gross (before taxes) and net (after taxes).
It also speaks to any adjustments you may make that speak to your ability to borrow or pay rent somewhere.
W2 or 1099
Employers and contractors must send a W2 (full-time employee) or 1099 (independent contractor) by January 15 (although it’s changed during COVID) each year. This document can also be used as proof of income.
Independent contractors may need to provide 1099s from all their clients. You may even be asked for written proof of income letters from your employers stating they plan to continue to pay you in the future.
Proof of Income
Getting proof of income can land you a new apartment, car, or loan. But you need to provide the correct document—like a W2, tax return, or pay stub—to get approved by most vendors.
For more financial tips like these, check out our blog!