Every year, US citizens have to file income taxes on April 15th (with the exception of 2020, where the deadline was extended by 2 months to accommodate the coronavirus pandemic).
While for many, this means a great tax refund, it also means a major headache. For example,
In this article, we’ll discuss what proof of income documents you can use when you’re filing taxes. That way, you’ll have a much easier time navigating this process.
When proving income for your taxes, one of the easiest ways to do so is through your employer’s paystubs. If you’re like most other people, you probably get paid on a weekly or biweekly schedule. Even if you get direct deposit, your employer should still send you proof of the deposit so you can check what was deducted, how many hours you worked, and your total amount of pay for the period.
It’s recommended that you save paystubs for at least a year before throwing them out. That way, you can use them as recent proof of income and you can also check that you were paid out correctly and that your taxes were filed right as well.
For people who have thrown out their paystubs prematurely, or those who are self-employed, you may not be able to use paystubs as proof of income. In that case, you can print out bank statements instead.
This is commonly accepted as proof of income since it’s hard evidence from your bank that you’re regularly receiving a salary or payments from clients.
However, if you don’t have a separate business bank account, it may take some work to separate personal transactions from business ones. This may not make it worthwhile to use this method of proof of income, especially when you have many other choices available.
W-2s or 1099s
If you have an employer, they’re required by law to file a W-2 every year on your behalf, especially if you’ve earned over $600 in one year. On Form W-2, you’ll see the total amount of income you’ve made for the year, in addition to any taxes that were withheld. So submitting a W-2 as proof of income is very easy to do.
On the other hand, if you’re self-employed, you’ll have to get a Form 1099-MISC from your clients. You need to have them fill one out if you’ve earned over $600 from them during the year. You can then use this similar to how you’d use a W-2, in that you can prove the income you’ve received throughout the year.
With either form, it should be sufficient enough to file your taxes with, as these are government-issued forms. In addition, they both show your total income and any deductions you may have made, which makes reporting much easier.
If you don’t receive paystubs or have thrown your recent ones away, you can always make your own. You can go on a pay stub generator free website and input your information. Then, it’ll generate a paystub that’s very similar to the ones an employer would give you, complete with tax deductions as well.
Do note that this will not stand as proof of income on its own, especially when you’re filing taxes. You can submit this with other forms of evidence on this list, such as bank statements and/or your W-2. You can also use the self-generated paystubs for your own purposes as a way to keep track of your earnings.
What Else You Can Use These Proof of Income Documents For
It’s well worth keeping your proof of income documents around. Not only can you use them to file taxes, but you can also achieve a lot of milestones in life with them too.
For instance, landlords of apartments usually want to check that you have enough of an income to pay your rent consistently. When you can provide these documents, they’ll have peace of mind knowing you’ll be a reliable tenant.
Another example is taking out loans; this can be an auto loan, mortgage, or other types of personal loans to make a large purchase in your life. Again, lenders want to see that you have the capability to pay off this large sum in a timely fashion. These documents will give concrete proof that you will repay your loans on time.
Do note that you can use your previous year’s tax return as proof of income if you have it. This can save you the trouble of gathering all the other documents up as proof.
Have These Proof of Income Documents Ready When Filing Your Taxes
Now that you know which proof of income documents are accepted by the IRS, you can have them ready when you file your tax return. What’s great is this information is useful not just for this year, but for all the years to come.
So you can get these documents when they’re available and put them in a special folder to access come tax report time. It’ll save you tons of time and you’ll have less of a headache when the time comes around.
And the next time you need to prove income with documents, you’ll know what you can use. When it comes to things like renting an apartment in a hot market, this can definitely give you a leg up on other potential tenants, as you’ll have all your documents ready while they’re still gathering all theirs up.
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