Having proof of income documents will provide you with several benefits.
People typically have a hard time proving their income when they’re self-employed. Proving your income is necessary if you’re trying to file taxes or get a loan. Lenders will want to see how much money you’ve made to determine if you’d be able to pay them back.
Understanding how to prove your income will make either of these processes simpler, and it’s always good to monitor your finances.
So what documents prove income? Read on to learn about the best options.
Pay Stubs
The best way to prove income if you’re employed is to print pay stubs. Pay stubs are typically provided by employers, but you can make them on a site like ThePayStubs if you’re self-employed. These documents will show several things such as your income and personal info.
What makes pay stubs the best option is they show exactly where your money went. Unlike most documents, pay stubs show what portion of your income went to taxes, insurance, etc. This also makes it easier when it’s tax season because you won’t need to do a bunch of calculations to come up with accurate numbers.
Bank Statements
Proving your income can also be done with bank statements because they’ll show how much money has entered and exited your account. The problem with a bank statement is you could have alternate platforms in which you receive money, like PayPal.
If you’re looking to prove your financial eligibility to someone like a lender, one statement from your main financial institution should be enough. However, you’ll need statements of all platforms you use if you’re trying to file taxes. For example, all of the money that goes into your PayPal is considered income.
Tax Return
Proving income can also be done with a tax return, although it doesn’t necessarily show your current income. A previous tax return is good for anyone who’s looking to borrow money right after tax season, but it won’t mean much to you if you’re trying to file taxes for the current year.
Tax returns are similar to pay stubs in that they show how much of your income was deducted. Whether you’re self-employed or work for a company, you’ll receive a tax return if you make enough to file taxes.
Use These Proof of Income Documents
Proof of income documents come in many forms, but these are the best ways to prove how much money you’ve made. Whether you’re trying to get a loan or are filing taxes, these documents will ensure that the process goes smoothly.
If you’re self-employed, we encourage you to start making pay stubs every quarter of the year. This will allow you to stay on top of your finances and filing taxes will be a lot easier. Should you decide to use bank statements, ensure that you get a statement from each financial institution that you use.
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