A pay stub or payslip is part of the paycheck that lists employee pay information. It shows the year-to-date payroll and wages earned in that period. It also indicates taxes and other deductions. Workers can use the information to ensure fair compensation, showing proof of income, and pay taxes.
Below are some reasons to store your paystubs.
To Prepare For Tax Audit
Maintaining financial records is critical for protection during a tax audit. Whether employed or a freelancer, the state or federal agencies can request to audit your financial records. You prepare yourself for such cases when you have copies of each pay stub. You might submit the financial documents to support information on the tax fillings. Whether you rent an apartment or buy a new home, you’ll likely make periodic payments over a long time. Due to this, you might need to provide proof of income. Pay stubs are a source of such proof as you can show the realtor or landlord you will make timely payments.
For Identity Verification
When opening a bank account, the financial institution requests documents to verify your identity. Each pay stub shows the social security number with other personal details. To verify your identity, you can provide the most recent pay stub. The bank may also request state-issued identification, a copy of your social security card, and other documents confirming the pay stub information.
To Apply For Loans
Sometimes, you might need a loan for emergencies. However, finding trustworthy creditors and filling the paperwork involves many steps. Since reputable lenders require proof of income, you can submit the last pay stub as proof that you can cover installments. When you don’t have the poof, you’ll settle for shady creditors that you should avoid.
To Track Retirement Contributions
It can be challenging to determine the amount and time to save for retirement since it is a long-term financial plan. If you build the retirement saving in the paycheck deductions, the paystubs can help you track the amounts you save over your career. It shows the deductions that include retirement savings. Moreover, in the current challenging times and gig economy, some people work on two jots to provide a better living standard to their children or make ends meet. For some, it’s part-time jobs, while others have remote roles around their primary occupation.