Are you looking for ways to establish that you have an income? Whether you are buying a new home or car or renting an apartment, you’ll need to show a seller or lender you can afford it.
The median household income in the United States is $68,703, but what you earn depends on your profession and experience level. Proving your income can be hard if you don’t have the paper trail to establish it.
Read on to learn how to show proof of income the next time you need a loan!
The easiest way for you to establish your income is to give someone your pay stubs. Think of a pay stub as similar to a receipt for the time you spend working.
Your pay stub should have your name and address, as well as the hours you work and your gross and net income. For the most accurate indicator of what you earn, provide a pay stub from the end of the year that has your year-end income.
If you don’t have your own pay stubs, you can use a pay stub maker to document the amounts you earn.
One of the most effective ways to show proof of income is by furnishing your W-2 for each job you work. If you are an independent contractor, you will receive a Form 1099 instead of a W-2.
A W-2 is similar to a pay stub, but more informative because it shows the aggregate amount of what you earn for a year. For example, if you work more than one job, a W-2 gives someone a look at the total amounts you earn in each position.
Your tax returns are a helpful document to establish income but they are also the most personal document. Sometimes a lender will request tax returns for the past two to three years. The reason they make this request is so that they can get a true sense of your earnings in the recent past.
The Internal Revenue Service (IRS) generally recommends that you keep your tax return records for at least three years! This will help out in the event you need them for a lender!
How to Show Proof of Income
If you are wondering how to show proof of income, now you know different ways to do it! When a seller or lender asks for your proof of income, it may seem rather invasive of your personal financial situation.
Despite your reservation, showing someone that you have proof of income is smart for a lender and a borrower. That’s because it will help both parties feel more comfortable that they are in a reasonable financial position to fulfill their obligations in the deal.
Are you interested in learning about other personal finance tips and tricks? Check out our blog section for posts on how to begin living a more financially responsible life today!