Presented by Paystrubmakr.com By John Wolf and Tom Cullen CPA
Going through a drawer full of unfamiliar documents, receipts, and other slips to find your pay stub seems to be daunting. Sorting these documents is another boring task. The long and painful process includes looking at each document carefully one by one and trying to figure out which ones are worth keeping. Maybe it’s the ‘better safe than sorry’ approach as some people throw them all away without even checking them! This is not a smart practice especially if you are looking to make any large purchases in the future. You will need some of those papers to prove your employment and income to the lender.
The COVID-19 pandemia made a big change in our working life. We had workers working from home, or not working at all but being paid part of their salary. Paystubs needed to be made, so they will be able to purchase anything they need or rent an apartment.
If you’re an employer., then you must be giving pay stubs to your employees. And if you’re an employee, then you must be getting pay stubs from your employer.
Employers may provide you with a paper pay stub, also known as a payslip or paycheck stub, or you may need to log into your payroll company’s website to access them especially when you use direct deposit. You can use this as proof of income, providing details about your employer as well as how much money you made in a given pay period. Under the PANDEMIA life there was no other way then online generating and sending the paystubs.
Still wondering why you should bother keeping these documents? Below are some reasons you should keep your pay stubs:
- Proof of Income
When applying for a personal loan, you need all the necessary documents for approval; this includes proof of income. Lenders request proof of income as a way to verify the borrower’s ability to repay the loan. However, the documents of proof of income can be different depending upon the lenders. Lenders can have different requirements and when it comes to the proof of income. Some may ask for one document (pay stub) showing your income while others ask for several (many weeks of pay stubs and your last income tax return).5 Personal Loan Requirements To Know Before Applying
- Proof of employment
To get the clear picture of a borrower’s ability to repay their debt, lenders typically require proof of income. These documents will also show that you have a steady job and therefore a solid stream of income. If you are self-employed and don’t have a steady job, you may be required to submit other evidence showing how much money you have in your bank account or your salary each year.
- For Income Tax return filing
Paycheck stubs come in handy when it is time to file your income tax for the year. These stubs help us in showing our total income, the total amount of taxes we paid, proof of work expenses as well as the proof of health benefits. These may help when itemizing your taxes.
- For a work reference
Other than the proof of income and proof of employment, there are many other ways pay stubs help. They show the number of hours worked per pay period, where you worked and the length of employment.
A pay stub is somewhat like a resume of your income. It shows all the information regarding the current pay period and year-to-date totals. These totals are the evidence that pay has been continual and consistent. If this information is not there, the lender may decline the application.
Recreating your receipts is an overall wise decision that will help you in many ways. It will make life easier to have these documents where you can access them quickly or the ability to recreate them when you can not locate the original.
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Disclaimer: John Wolf and paystubmakr.com are making a total effort to offer accurate, competent, ethical HR management, employer, and workplace advice. We do not use the words of an attorney, and the content on the site is not given as legal advice. The website has readers from all US states, which all have different laws on these topics. The reader should look for legal advice before taking any action. The information presented on this website is offered as a general guide only.