Income verification is an important part of many financial transactions, and if you’re looking for a new mortgage, car loan, or something else where your income will be taken into consideration, it’s necessary.
Income verification can be hard to get in some cases, especially if you don’t work on the books. But there are ways to prove that what you say about your salary is true. Below are steps to take, and how best to present your information when seeking out these types of loans and other financial products.
Check Your Pay Stubs And Bank Statements
Use your bank statement to show the time you worked, and how much was paid out. If it is a weekly, bi-weekly, or monthly pay stub, showing the number of hours worked on that specific date as well as total earnings can be helpful. Income verification does not have to come from a single source only, you can, with this online paystubs maker, generate a way to account for your money, as long as the information is consistent and accurate. Income verification can also come from a bonus, commission, or other forms of payment that were received within the previous year. Income taxes should be taken into account when calculating your annual income for these documents.
Get A Letter From Your Employer
This is a good way to show proof of income with your employer’s letterhead and seal. Income verification can also be obtained by providing an annual earnings statement from the Social Security Administration or IRS. Both agencies will provide this information for free, so it won’t cost you anything out of pocket when applying for loans.
Provide A W-12 Form For The Tax Year Of Interest
If you have a paycheck, there will be tax information on your pay stub that shows what deductions were taken from your wages, and any federal, or state taxes then withheld. You can also receive a W-12 form from your employer that shows how much you earned and will show the total amount of taxes withheld. Income tax returns for self-employed individuals can also be used as proof if they indicate what deductions were taken, such as business expenses. The gross income amount at the top of the form is what you would include in your application.
Provide Documentation To Prove Self-employment Income
This documentation should include your business license, tax returns (if you are self-employed), or any other information that proves your income. This documentation may vary depending on your situation. Income verification for a full-time job would be different from self-employment income. You can also include any other types of proof you have, such as a bank statement or records showing an investment portfolio value. These are just examples and do not cover all situations that could require further income verification.
If you are self-employed, it can be difficult to prove your income. Even if you do have bad credit, and find the right lender to work with you on this issue, lenders will likely use an Income-To-Debt Ratio (ITD) calculation that requires proof of income. This is why it’s important to provide documentation to prove your income. Be prepared to show proof of any additional sources of income such as Social Security benefits, or child support payments if requested by the lender.
Any time you are applying for a new loan or trying to get credit, there is always the possibility that your income will be questioned. If this happens, you must have documentation on hand to prove what you’re saying about how much money you make. Ensuring that these documents are readily accessible ensures that if needed, they can be found quickly without delay which could mean missing out on vital opportunities.