There are some businesses that need to verify income. Real estate businesses need to make sure that tenants can pay the rent. Banks have to ensure that loans get repaid before approving them. About 6.5% of personal loans are in delinquency status.
The most common way to verify income is to ask for the most recent paystubs. This is an accurate reflection of how much someone makes at the present moment.
People are pretty crafty. They find creative ways to get around your requirements by providing fake paystubs. You need to learn how to spot fake paystubs before you do business with the wrong person.
Keep reading to learn what to look for when looking over paystubs.
Look at the Formatting
A legitimate paystub normally has impeccable formatting. The name, address, and contact information is aligned to the left. The company name and address is aligned as well.
Take a close look at the zeros on the paystub. If you just glance at a paystub, you won’t notice that there are differences between the number zero and the letter o. If you see letters where there should be numbers, you have a fake paystub.
Most businesses use software to create paystubs. There are great check stub templates to select from which give them a professional look. Anything drawn up on a spreadsheet is a red flag.
If you have any doubts, you can always call the company and confirm the amounts listed on the paystub.
Double Check Tax Withholdings
Here’s where most people give away the use of fake paystubs. There are a couple of simple formulas that you can use to identify whether or not you’re dealing with a fake paystub.
Do you know the state withholding rate in your state? If you live in a state like Florida or Texas, there isn’t an income tax. If you’re a state without an income tax and see state tax withholdings, you’re dealing with a fake paystub.
Now, if you live in a state with a flat tax like Pennsylvania, just calculate the tax rate by the gross pay. A correct calculation is a good sign.
Federal tax withholdings are a bit more complicated because we have a progressive tax system. You can look at the IRS tax withholding table to see if you can make sense of the withholdings.
You can also look at the FICA withholdings. Most people don’t know what these are about. They’re for Social Security and Medicare. You can calculate 6.2% for Social Security and 1.45% for Medicare.
You also want to check all paystubs that you have to make sure the percentages are consistent.
Spot Fake Paystubs Easily
You never know when you fall victim to a scam. People will go to great lengths to rip other people off. You need to protect your business, which makes it necessary to spot fake paystubs.