Income verification is a vital part of any financial transaction. If you need a new loan, a new mortgage, or something where they consider your income, income verification is important. There are several ways and documents to help you prove that whatever you say about your income is true. Here are the ways to show proof of income:

Use Pay Stubs and Bank Statements

A bank statement will help you show the duration you worked and how much you were paid. If it’s a monthly, bi-weekly, or weekly pay stub, indicating the number of hours worked on that time and also total income will help. Income verification doesn’t have to come from one source, and you can use online paystub creators to make a way to account for your income. The information has to be accurate and consistent, though.

Creating your paystub is one of the effective ways to show proof of salary if paid in cash. You can print and fill out numerous templates online every time you are paid. To create a paystub, make sure you include:

• Customer name
• Services rendered
• Data
• Amount you received

Then, keep them in a safe place for future use and create a reliable system for documenting. While it might be a time-consuming process on the front end, you’ll be thankful during tax time.

Keep an Up-to-Date Spreadsheet

Instead of pricing off pay stubs, you might want to keep the records digitally. There are some options in that group, and one of them is a simple Excel sheet. Create headers to indicate the specific details to record. This will make your recording and documentation straightforward.

Using a search function, you can locate specific payments faster than you can when sorting through the papers. If you're using a spreadsheet, bear in mind that your PC can crash. For this reason, it's important to keep printed backups.

Bookkeeping Software or Create Your Receipts 

If you want to have an already created template instead of making one, bookkeeping software will help you record the transactions. This software will make things convenient and safe since it has sufficient online storage options. Additionally, the software is compatible with various programs for filing taxes, making life simple.

A receipt book offers an outline of the important details to record whenever you make a transaction. Even though they're costly, they can be the best way to show proof of income. Whenever you receive a payment, use the book to record the transaction and get a signature from the customer to verify it.

Present a W-12 Form From the Tax Year in Question

If you had a paycheck, there’d be tax details on your pay stub that indicate the deductions made from your income and any state or federal tax then withheld. You can get the W-12 form from the employer that indicates how much you made and will also show the total tax withheld. However, income tax returns for self-employed people can be utilized as proof if they show the kind of deductions made, like business expenses. The gross income amount shown at the top of the form is what you include in the application.

Deposit Payments and Print Bank Records

Be diligent about depositing all payments into the bank as they come and print out your bank statements. This is the best way to record all the transactions you need automatically. It can also be the simplest way to show proof of income when paid in cash. The bank statement will serve as a makeshift ledger of your payments and make recording your income easy.

Proof of Income Letter from Your Employer

This is the best way to prove income with an employer’s seal and letterhead. Income verification can be obtained by showing an annual income statement from the IRS or Social Security Administration. Both bodies will offer this info for free. Therefore, it will cost you nothing when applying for a mortgage.

Additionally, the letter will verify that you’ve been paid for the work done. It will include all the required info about the services rendered, the customer information, and their signature. It’s a good option if you're required to verify your income.

Use Tax Documents

While it may be costly, consider hiring a certified accountant to help with the advanced tax field. Your tax documents will serve as evidence of income whenever needed. These official documents are verifiable and useful resources for proofing income. Tax returns will indicate how much you made in the past year when filed properly.

Endnote

Whenever you're applying for a new mortgage or credit, there's the likelihood that the lenders will question your income. That’s how they can determine eligibility for the loan. When that happens, you need to have documentation ready to prove what you are saying about your income. Ensuring these documents are easily accessible ensures that, if required, they can be retrieved quickly without any delay. Use one or many of these alternatives to show proof of income.