Pay stubs are important proof of income documents that needs to be kept with your financial records. They reflect the income you have earned from a company and are often used in home, car and loan applications. Therefore, it is important to keep your pay stubs handy when you need them.
In this article, we will discuss how long you should keep your pay stubs?
Table of Contents
- What is a Pay Stub?
- How Long to Keep Pay Stub Records?
- Why you Need to Keep Pay Stubs?
- How to Store Pay Stub Records?
- What Can I do With Old Pay Stubs?
Pay stubs should not be confused with pay checks and W-2s. What is a Pay Stub? A pay stub is a detailed record of earnings and deductions for a given pay period. Whereas a W-2 details an accumulation of all income earned from the previous year. A Pay check is the form of payment given to an employee similar to cash.
How Long to Keep Pay Stub Records?
The general rule of thumb is to keep you pay stubs for at least 3 years. If you are under audit or are filing your taxes, and you don’t have access to your W-2, you may want to keep them for longer than 3 years.
Regardless of how long you keep them, it is important to keep them in a safe place because they often are used as proof of income for a home, car, or loan application. And you never know when you may need them.
Why you Need to Keep Pay Stubs?
There are several reasons why you need to keep your pay stubs for 3 years. It can be used as supplementary information for a home, auto or a loan application.
House or Apartment
It is important in the event that you want to refinance your auto or home loan. You will want to provide the lender with proof of income in order to classify and approve your application. A pay stub is an easy way to prove your current income.
Car or Auto Dealership
A car or auto dealership may often ask for you pay stubs. Pay Stubs are important documents because they help dealerships know how much money you can afford for car loan payments.
If you are getting a loan from your bank or apply for any type of financial services, you will want to present your pay stubs for verification.
Some financial institutions may not pay stubs older than 3 years. It is essential that you check with your lender for your situation.
Certain government funded program also uses pay stubs as proof of income documentation. Some programs require proof of income to determine how much assistance they can give you.
Student Financial Aid
Pay stubs are another document that is required to obtain student financial aid. In order to obtain financial aid, there is a form called the FAFSA that needs to be filled out by the student. A pay stub is also required to verify your income and your available assets.
If you or your children are in college, contact the college or university to find out if they need any pay stubs from the past 3 years.
How to Store Pay Stub Records?
The main purpose of keeping the pay stubs is to prove your income if needed in the future. Therefore, it is important that you keep them organized and in a safe place because they can help you when you are getting a home, apartment, car, or for any other financial transactions.
It is advisable that you keep the most recent pay stubs in a safe and secure place. This way you can easily take them out if needed. Nice and organized by most recent pay stub.
What Can I do With Old Pay Stubs?
If you no longer need to keep your pay stubs, you can choose to shred them to save space. They don’t need to be saved in a file box for years.
In general, there is no specific time frame that requires you to keep your pay stubs organized and available. However, you should look at your situation and decide if you think it is appropriate to shred them or keep them.
Copy Pay Stubs Digitally
You can always digitally copy your pay stubs online. You can either scan them or take a picture of them and save it in the cloud. These types of files are secure and safe because if you lose your pay stubs, then the digital copies will ensure that you have a back-up.
If you wanted to dispose of your old pay stubs, the best way is to shred them. Pay stubs often contain personal information such as your social security number and your address. Therefore, it is important to destroy them in a secure manner.
It may be a good idea to convert hard copies of pay stubs to an online format. You can keep them securely in the cloud or scan and save the documents to digital formats.
While it is advice to keep pay stubs for at least 3 years, some financial institutions do not accept pay stubs older than 2 year. It is essential that you know specific requirements for your situation.
To help you decide on how long to keep your pay stubs, it is best to speak with a financial adviser or tax consultant.