Proof of Income: Verifying Documents

Proof of Income: Verifying Documents

Proof of income is documentation that verifies a person’s current and ongoing source of income. It is important for landlords to request proof of income from potential tenants because it is a reliable indicator of the tenant’s ability to afford monthly rental payments. Landlords want to make sure that the tenant has a steady and sufficient income to make regular rental payments, and proof of income helps to confirm this.

Some common forms of proof of income include pay stubs, tax returns, W-2 forms, 1099 forms, employer letters, unemployment documentation, disability insurance awards, pension statements, and court-ordered payments. By having proof of income, landlords can reduce the risk of default and make informed decisions when selecting tenants for their properties.

Verifying a tenant’s ability to afford monthly payments starts with checking their steady income. To do so, you can ask for various forms of proof of income documents or request a comprehensive tenant screening with income insights. Here are ten documents to consider when verifying an applicant’s income:

  1. Pay Stubs – A common form of proof, pay stubs are usually received by employees of corporate jobs at the end of each pay period. Note that they may not reflect the complete income picture for those who are paid commission or have an inconsistent hourly schedule. Request the applicant’s most recent pay stubs to confirm their job status and monthly earnings, and consider asking for multiple stubs to cover at least a full month’s period.
  2. Tax Returns – To demonstrate their unearned income and history, applicants can provide their most recent tax returns. However, it only displays information from the previous year, not their current income.
  3. W2 Forms – A government-issued document that verifies income, the W2 form provides an overview of the applicant’s income from the previous tax year. However, it may not reflect the most current income information.
  4. 1099 Form – This form reports miscellaneous income and is typically provided by self-employed or freelance applicants. A self-employed or freelance worker may have multiple 1099 forms from a given year, and their reported income may not match their current or expected future income.”
  5. Employer Letter – An applicant can ask their employer to write a letter verifying their income and employment tenure. They can also provide an offer letter that summarizes their position and salary. An employer letter can serve as a reference, but you should verify it by calling the author to ensure its authenticity.
  6. Court-Ordered Payments – If the applicant receives regular court-ordered payments, they can provide the award letter from the court as documentation of those payments.
  7. Pension Distribution Statement – Retirees receiving monthly pension payments can provide their pension statement, in the form of a 1099-R form, as proof of income.
  8. Disability Insurance – An applicant who is earning worker’s compensation may provide their award letter from the insurance company or court to prove their income. However, you may want to ask for additional documentation to verify their source of income after the worker’s compensation ends.
  9. Unemployment Documentation – If the applicant is receiving unemployment benefits, they should have documentation showing the amount they receive on a regular schedule.
  10. Court-ordered payments -If an applicant is receiving regular court-ordered payments (for example, alimony or child support), they can provide documentation of those payments—typically in the form of the award letter from the court—as their proof of income.

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