Last Updated on May 11, 2022 by Fair Punishment Team
Proof of income can be different things. Most commonly, proof of income is your pay stub. A pay stub is the piece of paper, or electronic, statement you receive from your employer.
It details all the income that you receive as remuneration for your job. It will also detail any tax that you pay and any other deductions.
Sometimes the need arises for proof of income. This could be in order to rent an apartment, for medical expenses, or taking out a loan. All of these things require some proof of income in order to ensure that you can pay your way.
But what do you do if you are out of work and living on subsidiary income?
If that happens, you may be receiving unemployment benefits. The question is, can you use this unemployment as proof of income? Let’s explore what happens when you are on unemployment and require a proof of what income you have coming into your bank account.
What Is Unemployment?
Unemployment is a payment made weekly or monthly to your bank account by the government.
It is a benefit that you can claim if you are currently out of work for whatever reason. It is intended to contribute and substitute towards the cost of living, rent, groceries, and other bills you may have.
You can only claim this benefit in certain circumstances.
Firstly, you have to show that you lost your job according to certain criteria. So, this means that you can’t claim unemployment if you left work for an invalid reason.
An invalid reason could be that you didn’t enjoy the job and quit without making proper arrangements to support yourself. It could also be that you were fired with good reason.
Good reason means when you lost a job owing to being at fault, or acting in a displeasing way, during your work activities.
In order to claim the unemployment remuneration, you must have left employment for valid reasons. These include the death of a close family member, an illness that impedes your workplace abilities, and unfair dismissal.
You can also claim if you have been subject to harassment, sexual, or other inappropriate behavior in the workplace that has affected your mental health and ability to fulfill your contractual requirements.
You are only able to claim unemployment benefits for a fixed period of time. This is around six months. After this time, your claim ends and must be renewed.
You also have to prove your income or lack thereof. This can be in the form of previous pay stubs or bank statements that show what money you have had coming in under your name.
You have to report unemployment on your tax form and pay tax against it. This is a very important thing to keep in mind.
You will be in receipt of an unemployment benefits statement. These need to be recorded and saved properly, preferably somewhere you can access them easily.
Why Might You Need Proof Of Income?
There are a lot of different reasons why you may need to prove your income from time to time. Below are the main life events that require a pay stub in your name to show that you can afford repayments and such.
Medical Insurance
Medical insurance is a financial service. In order to access healthcare, dentistry, and eye care, you have to have medical insurance.
If you don’t, you will be saddled with a rather large bill to pay, and probably little means to pay it. Medical insurance ensures that your appointments, surgery, prenatal care, and other medical expenses are taken care of.
You have to commit to a monthly, or yearly payment. There are lots of different medical insurance companies and lots of different medical insurance policies.
Each policy will have different terms and conditions and cover different things, with a range of different prices. Most insurance companies will require a proof of income in order to make sure you are in a position to afford repayments and cover any excess should the need arise.
Renting A Property
Renting a property is a contractual agreement between yourself and a landlord, aka the legal owner, responsible for the mortgage of a property.
This is essentially a financial arrangement in which you pay a sum, normally covering the cost of the mortgage and more for the landlord, in return for a place to live. Alongside a credit check, landlords legally require proof of income.
Entering A Mortgage Agreement
A mortgage agreement occurs when you purchase a house or apartment. It is essentially a loan against the property, that you pay on a monthly basis. It accrues interest, and different lenders have different criteria.
Though a mortgage can give you a big sense of security, all lenders across the board will need to see that you can afford the contractual payments.
Claiming Unemployment Benefits
To claim unemployment benefits, you must have proof of income from previous work. It can be difficult to start an unemployment claim without proof of prior employment. You need this to show that you have been actively working.
If you don’t have this, you will need other proof as to why.
Loan Applications
Loan applications are an agreement between a borrower and a lender for an agreed amount of money. They are normally repaid monthly, and will absolutely demand proof of income.
You will struggle to enter any borrowing situation without pay stubs and, a financial history in your name.
The Obstacles
Benefits run for a six-month period. Therefore, anything that is longer than those terms cannot legally accept unemployment benefits as proof of income, or proof that income will be sustainable over a longer period of time.
Mortgage Applications
This is because a mortgage agreement is, without a doubt, longer than a six-month term commitment.
Not only this, but claiming unemployment also shows that you have no stable income.
However, you may have a pre-established mortgage and find yourself in financial hardship, and need to claim unemployment.
If this is the case, communicating with your mortgage provider is advised. They may require proof of unemployment in this circumstance to ensure that you will still make the payment, and don’t end up losing your home in the interim.
Disability, Injury, And Sickness
You may find yourself out of work owing to disability, injury, or long-term sickness. In these cases, there are added benefits on top of unemployment that you can claim.
You will need to show proof of your disability, injury, or sickness for as long as it is hindering your ability to work. You will still need to renew your unemployment benefits every six-month period.
Wrongful Termination
In this case of wrongful termination, you will need to show evidence. This is the only way to ensure that your unemployment is not affected.
Though this may not always be achievable, it is important to try to gather evidence as best you can in order to not lose the benefit.
Until a time that you can find another job, you may need unemployment benefits to make sure you don’t fall far behind with your financial commitments.
Proof Of Unemployment And What You Need To Show
With all that in mind, unemployment can be used as a substitute for a job’s income in certain circumstances. Though you will struggle, and probably find it impossible to enter into a mortgage agreement, you may still be able to use unemployment to enter a rental contract.
There are some medical insurers that will accept unemployment pay stubs as proof of income also.
As long as you have your information organized and readily available, including those unemployment benefits, it counts as proof of income in most places. Though, it’s worth bearing in mind that unemployment is a temporary situation.
Conclusion
Can you use unemployment as proof of income? The answer, sometimes.
There are certain circumstances in which you can use the unemployment pay stubs to prove your income, such as for a landlord and medical insurance. However, they are not valid for mortgage applications.
This is because these benefits are not a long-term guarantee. They are an interim solution put in place while you are out of work.
