Have you ever been asked to disclose proof of employment income via pay stubs, only to realize that you don’t have any solid evidence to provide? If anything, it can be quite a bothersome situation to be in.
Whether you’re researching to find relevant knowledge on pay stubs to prove your consistent income for important documents or are simply trying to get orderly by filing all your monthly incomes, we’ve got your back!
What Is a Pay Stub?
A pay stub is a piece of official paper that highlights an employees’ net financial income. Hence, it can be considered as proof of an individual’s payment from their respective employment institution.
Quite often, pay stubs are part of the paychecks received by employees, which state their financial income. If not, they are usually attached along with the paycheck as a separate document.
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If you’re wondering why obtaining pay stubs is important, it’s because they help employees get a better sense of their overall compensation for a given time period. This is because it includes their pay rate, gross earnings, tax deductions, and employment benefits. It can help employees be sure of the income that they are earning.
What Do Pay Stubs Include?
A pay stub should include the following information:
- General Information: Name, address, social security number, and employment status.
- Gross Wages: Pre-tax wages without any deductions, hours worked, and additional earnings.
- Taxes and Deductions: Income taxes removed, Insurance costs, employment benefits payments, and voluntary contributions.
- Net Pay: Take-home pay and direct deposits.
So, When Would You Need a Pay Stub?
Wondering why you would even need a pay stub in the first place? There are many instances in which you could be asked to disclose your proof of income, from purchasing assets to obtaining loans, which is why you should always have all your documents sorted out.
To make it easier for you to weigh out the need to obtain a pay stub, here are some of the situations where you might be required to provide a pay stub:
Preparing for Tax Filing
We have all been through the undue hassle of filing taxes at the beginning of the year. Want to know what can make the entire process super quick and easy? Have your pay stubs at hand prior to tax filing!
Yes, you read that right. When you have pay stubs for the year, it shows you exactly how much income you have received, along with how much has been paid in taxes. The tiring process of tax filing is immediately cut down by half.
Moreover, organized pay stubs are especially helpful in case there are any discrepancies with your tax payments, as they can serve as proof of income and taxes paid.
Taking a Personal Loan
If you find yourself in a situation where you wish to draw out a personal loan, be it for purchasing automobiles or external investment. Chances are that among the many documents, a pay stub will be required as your proof of income. In fact, it might be the easiest financial document to obtain!
Not quite sure what your income has to do with taking out a loan? Well, your lender might want some assurance that you will be able to repay the loan you take out.
Purchasing or Renting a New Asset
Quite similar to taking out a personal loan, purchasing or renting a new asset, especially those that require interest-based financing, will involve the provision of a pay stub. You might even be asked to provide pay stubs of the past six months to ensure that you are able to finance the asset you’re purchasing or renting without falling through halfway.
Instead of delaying your purchase to go through the hassle of obtaining a pay stub from your place of employment, it is best to already have them filed and on record.
You Suspect Inaccurate Net Payments
Have you been feeling like you’re not fully getting the fruits of your labor? Have you spotted any inconsistencies in your recent bank balance? It could be a miscalculation on the part of your employers when transferring your payments. After all, mistakes are prone to happen!
Simply obtain your pay stub from your employer. It will give you a clear breakdown of your gross income, income before taxes, income after insurance charges and deductions, and net income.
With all financial information in front of you, you will be able to easily point out any mistakes, proving inaccurate net payments received well in time.
Claiming Accident Compensation
If you’re prone to accidents during working hours as a result of a strenuous job role, you might find yourself wanting to claim accident compensation sometime in the future.
While many don’t know this, your accident compensation is given as a percentage of your current income. This is why it is important for you to have an organized record of your pay stubs to ensure that you have solid proof of income at hand and can make a successful compensation claim.
What Are You Waiting For? Start Filing!
After critically analyzing all the situations that might require you to show your proof of income, have you finally realized that you might be discarding your pay stubs for no real reason? We don’t mean to scare you, but there are way more situations than the five mentioned above where you might be asked to prove your income.
But don’t worry! We’ll tell you a trick to compile them quickly.
Instead of throwing your pay stubs away or losing them around the house, it is best that you start to collect them, organize them, and file them with the rest of your important documents. After all, it is never too late to get started. Not quite sure how to bring uniformity in filing your pay stubs? Try all-rounded Pay Stub Generators that can assist you in filling, submitting, and downloading stubs that have all the information you need to have at hand. This trouble-free process is guaranteed to get you to arrange your financial documentation.