An employee’s paystub primarily serves as a record of their payment schedule and the amount of each paycheck. A paystub allows employers and employees to identify discrepancies with employee payments, and it protects against underpayments as well.
The paystub also helps employees understand their taxes, tax deductions, and employers’ contributions that affect what they take home each pay period. There are several situations where employees may also need to present their paystubs, such as applying for loans or housing or just showing proof of employment.
How to Get a Paystub
Paystubs are generally available upon request from most employers. You can contact the human resources department at your employer to obtain this information. Paystubs are a common way for employers to provide required employment records. There is no requirement for a paystub under the FLSA federal law, though, so your payment records may be in some other format depending on your employer.
If you are self-employed or work for a company that does not provide this kind of documentation, you can create your own paystubs online.
When Do You Need a Paystub?
Your paystub is an important document that may be used by potential employers, lenders, or your accountant when it’s time to do your tax returns.
These documents confirm in detail the amount that an employee has been paid. It also clearly states any deductions, withholdings, and contributions, in addition to how much money was withheld for taxes.
Here are the most common uses of a payslip or paystub outside of the workplace:
1. Loans
It is not uncommon that one of the documents required by a lender when applying for a personal loan is proof of income. The reason for this is to make sure that you will be able to repay the loan that you have taken out.
Lenders have different requirements depending on the amount of the loan. You might have to present the most recent paystub, whereas, in other cases, you might need to provide paystubs going back a month or two. For instance, a small personal loan would have many different requirements than a car loan or mortgage.
2. Signing a Rental Agreement
In order to confirm that you can afford to live in an apartment or home, landlords and apartment complexes often ask for proof of income when you are looking to rent a new home.
Landlords may require several weeks’ worth of paystubs from people applying for an apartment. Furthermore, they will also want to see how much you have earned so far with that company. This will give them an idea of how long you have worked for that company.
3. Income Taxes
You might want to keep your paystubs on hand for when you file your taxes at the beginning of the year so you can make the process easier. You can see your income earned for the year and your taxes paid on your last paystub of the year.
4. Compensation for Accidents
A paystub can come in handy if you have to file a claim for compensation if you have been injured and can’t work. Your paystub serves as documentation of how much you have earned previously and, more importantly, what you would have earned if you had continued working.
5. Keeping Track of Your Insurance Coverage
When you receive a paystub from your employer, you will see your insurance contributions. A pretax entry may indicate a payment is made before taxation, so you won’t owe tax on that amount. The type of insurance that is being deducted from your paychecks, such as life insurance, dental, disability, or medical insurance will all be stated clearly.
6. Staying Updated on Your Retirement Savings Plans
Contributions to retirement plans are a very common deduction from paystubs. There are several types of retirement plans, such as traditional IRAs and 401(k)s. Choosing your contribution percentage when enrolling in a retirement plan is essential. You will also have this amount deducted from your paycheck.
It is mandatory for you to provide proof of what you are claiming you’re missing out on if you are applying and demanding any type of compensation. The proof of your earnings is your paystub.
How Long to Keep Your Paystubs
Verifying your payment as soon as you receive your paystub is a good rule of thumb. Keeping paystubs for a couple of months is usually sufficient for verifying income.
The first paystub you receive for the year should be kept in case your W-2 form has any discrepancies. If you haven’t done your taxes yet, then make sure you can reconcile the last one you got with your W-2.
Scanning them ensures that they are easily accessible in a digital format, ready for printing if needed, and minimizing paper clutter, and you’ll have a copy in case the original is lost or damaged. As long as you save them in a digital format, you won’t have to worry about having too many physical documents.
Taking this approach is a good step in going digital, and your future self will thank you for being so proactive and organized.
Why You Should Keep Your Old Paystubs
After learning about six different circumstances in which it might be necessary to provide documentation of income, make sure you store those paystubs somewhere safe so that they can be accessed whenever necessary. If you are the type of person who constantly throws things away, it is time to change your ways. It is impossible to predict when you will face a situation where you will actually need your paystub.
If you have been throwing your paystubs away and now you’re realizing that you’re going to need a stub to verify your income, don’t worry. You can create the paystubs today with an online paystub maker! It only takes a few minutes to get everything set up, and you’ll be able to take control of your own personal documents this way.
