How to Prove Income
Copy tax returns from your own records., Order past tax returns from the IRS., Highlight your income amounts., Include other relevant tax documents such as 1099s.
Step-by-Step Guide
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Step 1: Copy tax returns from your own records.
If you've retained copies of your tax returns, you can simply make copies of the requested years to submit to the agency or lender.
If you have an accountant, or use tax preparation service, you also may be able to get copies of the tax returns you need through them.
The IRS recommends you keep your tax returns and related records at least three years from the date in which you filed.Typically your tax return must show the same first and last name as the name for which you're applying for a loan or benefits.
If you've changed your name in the past few years, such as because of a recent marriage or divorce, you may need to provide additional proof of that name change. -
Step 2: Order past tax returns from the IRS.
If you don't have copies of your tax returns in your own records, you can order copies from the IRS.
You can order a transcript for returns from the current year or the past three years by using the "Order a Transcript" tool on the IRS's website, or by calling 800-908-9946.
The transcript shows most line items on your return including any forms or schedules you filed that year.If you order online or over the phone, you generally can expect to receive your transcripts within 10 days.If the agency or lender requires an actual copy of a filed and processed tax return, you must fill out Form 4506, "Request for Copy of Tax Return," and mail it to the appropriate address on the form along with a $57 fee for each tax year you request., Once you've collected the correct tax returns, mark the information the agency or lender needs to know so they can find it easily.
Particularly if you are self-employed, your tax returns will be many pages long.
It may be helpful for the agency or lender to mark the items they will need to check to verify your income.
Keep in mind that if you've maximized your allowable deductions to decrease your taxable income, that resulting net income may not present the best picture for mortgage lenders who are trying to determine whether you have the ability to make monthly mortgage payments.
If you're showing a net loss for several years, you might consider using an alternate method to prove your income.
Typically a landlord or lender will want to see tax returns for the past two years.
If you combine your total income across those years and average it out, you'll have your average net revenue.
Dividing that same figure by 24 shows your average monthly earnings.
Particularly if your income is erratic, this number can be more helpful in proving that you have the income to pay the monthly rent or mortgage payment., Even if you don't have W-2s, 1099s can show the income you received from various clients or income sources throughout the year.
These documents also might be helpful to include if you filed a joint tax return but only need your income verified.
Other tax forms a lender or agency might need to see to verify your income include your Schedule C, which documents profit or loss from a business, and Schedule E, which is used to report other types of income such as rental real estate and royalties. -
Step 3: Highlight your income amounts.
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Step 4: Include other relevant tax documents such as 1099s.
Detailed Guide
If you've retained copies of your tax returns, you can simply make copies of the requested years to submit to the agency or lender.
If you have an accountant, or use tax preparation service, you also may be able to get copies of the tax returns you need through them.
The IRS recommends you keep your tax returns and related records at least three years from the date in which you filed.Typically your tax return must show the same first and last name as the name for which you're applying for a loan or benefits.
If you've changed your name in the past few years, such as because of a recent marriage or divorce, you may need to provide additional proof of that name change.
If you don't have copies of your tax returns in your own records, you can order copies from the IRS.
You can order a transcript for returns from the current year or the past three years by using the "Order a Transcript" tool on the IRS's website, or by calling 800-908-9946.
The transcript shows most line items on your return including any forms or schedules you filed that year.If you order online or over the phone, you generally can expect to receive your transcripts within 10 days.If the agency or lender requires an actual copy of a filed and processed tax return, you must fill out Form 4506, "Request for Copy of Tax Return," and mail it to the appropriate address on the form along with a $57 fee for each tax year you request., Once you've collected the correct tax returns, mark the information the agency or lender needs to know so they can find it easily.
Particularly if you are self-employed, your tax returns will be many pages long.
It may be helpful for the agency or lender to mark the items they will need to check to verify your income.
Keep in mind that if you've maximized your allowable deductions to decrease your taxable income, that resulting net income may not present the best picture for mortgage lenders who are trying to determine whether you have the ability to make monthly mortgage payments.
If you're showing a net loss for several years, you might consider using an alternate method to prove your income.
Typically a landlord or lender will want to see tax returns for the past two years.
If you combine your total income across those years and average it out, you'll have your average net revenue.
Dividing that same figure by 24 shows your average monthly earnings.
Particularly if your income is erratic, this number can be more helpful in proving that you have the income to pay the monthly rent or mortgage payment., Even if you don't have W-2s, 1099s can show the income you received from various clients or income sources throughout the year.
These documents also might be helpful to include if you filed a joint tax return but only need your income verified.
Other tax forms a lender or agency might need to see to verify your income include your Schedule C, which documents profit or loss from a business, and Schedule E, which is used to report other types of income such as rental real estate and royalties.
About the Author
Jeffrey Murray
Creates helpful guides on lifestyle to inspire and educate readers.
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