Because she “works in the right industries”. And if you worked in the right industry, you would just know. Cretin.
Because paystubs are easily faked. Cancelled checks, not so much.
Last time I had a pay cheque was in about 1983. I can barely even remember what it was like to have to go to a bank with a piece of paper in hand.
When I worked at a gas station about 8-9 years ago, we were paid out of the till. The manager would count out the cash and fold the pay stub around it. I didn’t even have a check I could show to prove employment, it had to be the stub.
But- as has been repeatedly pointed out- you, the wage earner, do not have a copy of a cancelled check that was written to you by your employer-- your employer does.
All you have is your paystub and I suppose your bank statement showing the deposit.
Lenders do have sort of funnily rigid requirements about income validation though. I applied for a loan recently and needed to close quickly. I didn’t have enough old pay stubs on hand to meet their requirements.
Luckily I own the company, so trying to not delay things I asked if I could send them quarterly employer tax filings, which show what my wages were and would be harder to fake than a pay stub.
They couldn’t, so I said I guess I’d have to take the time to reprint all my old pay stubs for them, because that was the only thing that adequately proved I was actually employed. Never mind that in either case I was just printing a copy of something I made myself and could easily change.
Anyway, of course a stub with a full account of earnings is better than a check. I was just surprised by the rigidity.
I work IRS settlements for clients every day, so I’m well aware of the need for paystubs vs different income verification. In the case of the IRS, they will usually accept the last three months as proof, but it just depends. I have plenty of clients who try to offer alternative means of income verification, but the rules are the rules.
Why is it that way? I’m not sure. I suppose it could be any combination of the ideas thrown about in this thread-- but I’d probably lend the most credence to the idea about vacation pay/benefits/etc.
If you are the employer you get the canceled check and whatever statement from the bank for your payroll account showing the deduction.
If you are the employee you do not get a canceled check, only the pay stub, plus whatever statement from the bank for your account showing the deposit.
I think you are missing the point that the paystub and the canceled check are not standins for each other. They each serve a different roll.
But you cannot reconstruct a salary from a paycheck, canceled or otherwise.
Lenders love ratios. Debt:income is a good one - monthly debt payments to monthly gross income in the case of the lenders I work with. A debt:income ratio that is too large will require a higher-level approval, and at a certain point it is too large for anyone (except I guess the owner, but I don’t think he’d do that) to approve it. Some people get only mandatory things withheld from their pay, some people get health insurance premiums also withheld, maybe a little extra for optional life insurance, maybe you filled out your original hiring forms indicating that you wanted extra tax withheld so you get a big refund check, maybe you don’t want any withheld and want to write the IRS a check every year…
Knowing that you got paid $816.56 3 weeks ago doesn’t tell the lender what the gross monthly pay is. It might be $850.00 gross, or $1000.00 gross. Whatever else is on your pay stub, gross pay will be there.
Lots of things can be faked, if that’s your thing - including checks. Including phone calls from your “employer” verifying your salary. Faking information to get a loan is called loan fraud. I suspect the possibility of a federal felony conviction may be keeping down the number of people wanting to print fake pay stubs.
ETA; Lincoln woman charged with 7 felonies in loan fraud case
Here’s what seems to me to be an obvious question: what the hell difference does the gross make to a lender? That’s money you probably never see or spend, so factoring it into the equation means just factoring back out again. What’s the point?
My net pay is less than half of my gross. It may be of interest to the lender that I am paying for disability insurance, health insurance, and that I am putting a shitload of money every pay into a stock purchase plan and a 401K. Lots of people have voluntary deductions from their pay that would give a false picture of income if a lender looked at the net.
On a more general level, looking at gross pay gives the lender the clearest and most accurate view of the total income available. All of the deductions from my gross pay are optional except for the withholding for taxes, and even they are adjustable. If I needed more money in my pay check for some reason, I could change my net pay instantly by a large percentage, simply by canceling some things I’m paying for, reducing my deductions for savings, or fiddling with my withholding.
It sounds to me like the OP is applying for something from someone who wants pay stubs, and the OP doesn’t have them. It also sounds like The OP has the canceled checks, which I guess means the OP owns the business or does the books. Good luck with your loan.
Gross salary reflects what I’m actually being paid. Net salary (except for taxes) reflects deductions I choose to make, such as my YMCA membership, retirement savings, health insurance premiums etc. It would be like asking to account for every bill I pay before considering my income. The amount of net pay is largely in my control, gross pay is in my employers.
C’mon… how much other than taxes do 99% of people have deducted from their gross pay that’s realistically likely to be in play? Gonna give up health insurance to qualify for credit?
And besides, if you fill out a loan app and state that you earn $1000, and you produce cancelled checks showin you earned $1000, it seems that’s all that should matter. If you really earn $1500 but $500 goes to health insurance and taxes, you obviously have elected not to include that $500 and don’t intend to, so again, what difference?
It’s all very silly.
I’m so confused. What canceled payroll checks??? I don’t have any canceled payroll checks to show anyone. Either I have nothing, bank statements over many months or I have my pay stubs. I guess my tax return too.
Frankly, the only credit I’ve ever need to document my gross salary in any way was for my mortgage. Never for a credit card or car loan.
You asked why someone would want gross income over net reported. I, and others, answered. You don’t have to think it makes sense but it doesn’t change the facts. Gross salary IS my salary. Considering that I max my retirement deductions my net salary is dramatically reduced. If I needed to I could change that if I was entering into a large purchase.
The only time I can think of where a canceled check is needed, and where I have a check to cancel that isn’t worth money to me, is when I need to offer one when setting up direct deposit. Then I take a blank check and cancel it so it can’t be used.
Why on earth would I cancel a check from my employer to me that has two weeks’ worth of wages on it?
Like I said, I do tax representation for people and use their paystubs (not cancelled checks! Since the employee doesn’t have a cancelled check anyway. . .) to make payment arrangements all the time.
Let’s see. . . things that are taken from your gross pay that effect your ability to pay your back taxes. The big one is child support. There are court ordered payments. Medical insurance. Union dues. Charitable contributions. Retirement contributions.
And yes, the majority of my clients have non health insurance stuff being taken from their check.
Another factor is that checks from a company could be for a one time service or sale of goods, etc. A paystub also shows that you are employed, and where you are employed.
Very good point!
Because the gross is what a creditor can go after in a wage garnishment. (subject to varying state laws vis-a-vis certain pay deductions, of course)