If you handle HR needs on behalf of your organization, or if you are an employer, occasionally you may receive requests from employees to provide their proof of income to a third party, such as a financial institution, or another employer. One way to do this is to fulfill these requests by drafting a proof of income letter for them.
Proof of income letter is usually used to confirm an employee’s employment status, salary information, employment details, and other details, depending on the reason the third party needs proof of income and your organization’s policy on sharing employee information with other companies.
Here is some background on why an employee may require you to write the proof of income letter, what you should include, and proof of income samples you can use to create your company proof of income letter template.
If an employee requests for a proof of income letter, it is usually for one of four reasons:
- They are requesting for a loan payment reduction or deferral, and they are required by the bank to present a proof of income before determining whether they’ll approve their request
- They are applying for an auto loan or a home mortgage, and the lender requires them to present proof of income to confirm that they are lending to someone who has a steady job and enough income to cover their payments before having them approved for the loan.
- They are taking up an opportunity with another employer, and they are required to provide proof of income letters to verify their information as part of the background check process.
- They are applying to rent a property, and the property management requires that they provide them with a proof of income letter to confirm that they can afford their deposit, payments, maintenance, and other related costs.
Even though your employees are not obligated to disclose why they are submitting their request for a proof of income letter, it is important that they state the type of information to be included in the letter.
What should be included in the proof of income letter?
The type of information to be included in the proof of income letter depends on what the requesting party needs together with the state requirements on the disclosure of employee information. Before disclosing any information, some employers require that the employee sign a form permitting them to disclose to a third party.
Proof of income letter should be printed on your company’s official letterhead or any other stationery that has the company’s logo. A standard proof of income letter must have the following information:
- Employers’ address
- Name and address of the company/third party requesting the proof of income
- Employee’s name
- Date of employment
- Employee’s job title
- Job description
- Current salary
- Reason for termination (if applicable)
Before drafting your letter, you should first verify with the requestor whether they need a physical letter or an email. When writing a physical proof of income letter, use the standard business format, with your company’s/organization’s contact information, the recipient’s contact information, and the date in the upper left-hand corner.
Proof of income letters should also be brief and include only information that is being requested by the third party.
Sample Letters & Examples
Here are sample letters you can reference when composing a proof of income letter or developing your company’s proof of income letter template.
Proof of income letter for a current employee
15th Aug 2020
Mr. Michael Stephens
726 Richardson Road
Atlanta, CA 9891
Dear Mr. Stephens:
This letter is to present income verification for Ms. Kyler Walker, who is working as the HR assistant for ABC ltd. And has applied for an auto loan from your bank.
I can confirm that Ms. Walker’s annual salary is $70,000. She is also paid a bonus of $700 each year, which may also be considered as part of her annual income.
Ms. Walker has been an employee at ABC ltd. Since January 2010 and is considered an employee with good standing. As of now, I don’t see any reason for her income not to be the same. Please find a copy of Ms. Walker’s salary statement for last year.
If I could be of any further assistance, kindly feel free to contact me anytime.
928 Sun View
When writing a proof of income letter for your employees, it is important that you follow all the state laws regarding the type of information you can share with third parties and provide the correct info in a formal, concise way. Since proof of income letter often help your employees secure loans, mortgages, apartments, new jobs, and more, it is essential that you ensure that you draft them with the utmost professionalism as they not only serve that purpose but can also reflect well on your business.
Dos and Don’ts
– List your own personal information like name, address, city-state-zip code, email, phone number, and so forth
– State the purpose you make your income proof
– Give the true details of your income
– Include additional income if any
– Tell the recipient about the possibility of your income to increase or sustain
– Use formal ending with a thank-you note
– Make your letter casual
– Disguise your additional income
– Use nickname or something, not your real name
After reading some points above I hope you can get an insight into what exactly the income proof letter is as well as how it works on. Once again, you are in the right place and if needed, you can use my samples and templates I am providing for free. Good luck!