What Documents Are Proof of Unearned Income?

Proof of unearned income is required in many financial and governmental situations. Providing accurate documentation of all income sources, including those not from employment, supports applications for loans or government benefits. Knowing which documents verify non-employment income streams helps meet reporting obligations.

Defining Unearned Income

Unearned income is money received that does not result from active labor or services performed. This differs from earned income, such as wages or business profits. Unearned income is generated from existing assets or specific benefit programs.

Examples include interest from savings accounts or certificates of deposit, and dividends from stocks or mutual funds. Other forms are rental income, Social Security benefits, unemployment compensation, pensions, annuities, awards, and winnings.

Documenting Specific Types of Unearned Income

Proof of unearned income involves official forms from financial institutions, government agencies, or other payers.

For interest income, Form 1099-INT, Interest Income, is issued by banks or credit unions, often for amounts over $10. This form details the payer, recipient, and total interest received. Bank statements also show interest credits.

Dividend income is reported on Form 1099-DIV, Dividends and Distributions, from brokerage firms or corporations. This form outlines dividend types and identifies the payer and recipient. Brokerage statements also corroborate dividend receipts. Forms are mailed by late January.

Rental income is substantiated with lease agreements and payment schedules. Bank deposit statements showing regular rental payments provide further evidence. For tax reporting, Schedule E (Form 1040), Supplemental Income and Loss, reports net rental income or loss.

Social Security benefits are documented with Form SSA-1099, Social Security Benefit Statement, from the Social Security Administration. This form details total benefits received, which may be taxable. A benefit verification letter from the Social Security Administration also confirms benefit amounts.

Unemployment benefits are reported on Form 1099-G, Certain Government Payments, from state unemployment agencies. This form specifies total unemployment compensation paid and any federal income tax withheld. Recipients can access this form online or by mail.

Pension and annuity income is reported on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts. This form indicates the gross distribution, taxable amount, and any federal income tax withheld. Annual pension statements or annuity payment records also detail payment frequency and amount.

Alimony and child support payments are evidenced by divorce decrees or court orders. Bank statements showing regular deposits further verify these income streams. For gambling winnings, Form W-2G, Certain Gambling Winnings, is issued by the payer for winnings above certain thresholds, such as $600 from a horse race or $1,200 from a slot machine.

Presenting Proof of Unearned Income

Once documentation for unearned income is gathered, present it to the requesting entity. Submit copies of documents, not originals. Always retain original documents for your records.

Organize proof systematically, by income type or date, to streamline submission. Ensure all submitted copies are clear, legible, and complete, especially for digital submission. Illegible or incomplete documents may lead to processing delays or requests for resubmission.

For electronic submissions, upload documents to secure online portals. For physical submissions, mail documents via certified mail with a return receipt for delivery confirmation. Keep a detailed log of all submitted documents, including dates and methods of submission.