Verifiable Income: Documents That Show Proof of Income

Are you applying for a loan?

You’ll need verifiable income documents to prove that you really make the amount you state.

If you have a regular job, proof of income is relatively easy with the documents you get from your employer. For people who are self-employed or own a small business, proving what you make gets a little tricky.

Check out these options for how to show proof of income.

Pay Stubs

Pay stubs are the most common form of income verification for various financial reasons. You’ll likely need at least your last two or three pay stubs.

This document shows how much you make, taxes and other deductions, and your net pay. This information shows the lender or other organization if your income meets the requirements.

Recent pay stubs also prove that you’re currently employed. If you’re applying for a loan, renting an apartment, or making another financial commitment, you’ll need to show you can afford it by being employed. With the Coronavirus pandemic, keep in mind that there could be things like a payroll tax cut that change things for both employers and employees.

If you work for yourself, you won’t get traditional pay stubs since you don’t have an employer. You can create a self-employed pay stub with a pay stub generator.

Tax Returns

Some situations may call for copies of your tax returns to verify income. They also may work as a substitute for pay stubs if you’re self-employed or don’t get payslips.

Tax returns show what you’ve earned for the full year. Lenders may request tax returns to see your historical earnings.

Since you don’t file taxes until the following year, this option doesn’t show your current earnings. A lot could change since your last tax return.

Say you’re applying for a loan in September. Your last tax return only shows what you earned through December of the previous year. That’s nearly a year ago.

You could have changed jobs or had another significant change in income in that time.

Wages and Tax Statements

Instead of providing your full tax return, you may be able to provide your wages and tax statements.

The W-2 is the most common statement. You should receive one from your employer in January of every year.

If you’re an independent contractor, you may receive 1099 forms to show income.

Bank Statements

Recent bank statements show how much money is coming into your account. This is a way for a lender or other organization to see your net income, but it doesn’t show your gross income. What hits your bank account is what’s left after any deductions.

If you’re self-employed, both your business and personal bank statements may work as proof of income.

Profit and Loss Statements

If you’re self-employed or run a small business, your profit and loss statements may count as income verification. Sometimes called an income statement, this document shows all of the revenue, cost, and expenses you had for the fiscal quarter, year, or another time period.

Bookkeeping Records

Another possible option for someone who’s self-employed is bookkeeping records. Your accounting software should include records of all of your expenses and income.