What can be used as proof of income?

What can be used as proof of income?

Several places require proof of income for many different reasons. Income is important for determining your ability to pay back a loan, or in determining access to various health care insurance plans. Your income can impact your life in many different ways.

Banks and rental companies often ask for proof of income because it determines your ability to repay your debts. They may ask for a proof of income letter which summarizes and verifies your employment and income. Many times, this letter can be written by your employer or, if you offer freelance services, an accountant.

Proof of Income from Employment
With a proof of income letter, you may be asked for additional documents like a pay stub or a copy of your previous federal tax return. Be sure your documents are original and not copies and include pertinent information like your full name, personally identifying information, date and amount of income, and name of the employer.

If including tax information, two common forms of proof of income include last year’s tax return or your 1040, or your W-2 wage and tax statement.

Proof of Income for Unearned Income
If you have unearned income, such as unemployment, you could obtain your unemployment benefits statement from your state’s unemployment office.

For social security benefits, your social security proof of income letter or your benefit verification letter should be sufficient.

If you receive an annuity, an annuity statement can be obtained from your insurance agent.

Self-Employment Proof of Income
It is essential to stay organized if you are self-employed. Keeping relevant documents together in a safe place is a good idea. For proof of income needs, bank statements are excellent for showing your history of regular deposits and can prove you have a stable income.

There are also your wage and tax statements or a Form 1099. Your accountant can also provide your ledger documentation, or a profit and loss statement reflecting your income.