Checking income for those with non-traditional jobs, like commission-based and seasonal workers, is tricky. The IRS says commission-based workers can write off some expenses. This makes it key to get their income verification right.
This step is vital for things like renting a place or getting a loan. Knowing how to verify income for these jobs helps people meet financial needs.
Key Takeaways
"The rental industry's traditional income verification methods were built for a workforce that increasingly doesn't exist. Today's landlords need to recognize that income stability and income consistency aren't the same thing. A commission-based worker with three years of reliable annual earnings may actually present less risk than a W-2 employee who frequently job-hops. The most progressive landlords are shifting from rigid verification checklists to holistic financial assessment frameworks that capture the true economic reality of today's diverse workforce. This isn't just about being fair—it's about making better business decisions based on actual risk factors rather than outdated assumptions about what financial stability looks like."
Taylor Wilson, CEO of Rent with Clara
Standard income documentation like W-2s and consistent paystubs work well for salaried employees, but they don't capture the reality of commission and seasonal work. A landlord reviewing a rental application from someone with commission-based income can't rely on a single pay stub to understand earning potential.
What looks like low income one month might be followed by a significant commission check the next, making it difficult to assess whether an applicant's stated income matches their actual earning capacity throughout the year.
Landlords need to look beyond surface-level numbers when evaluating variable earners. The tenant screening process becomes more involved because you're piecing together a financial picture from multiple sources rather than one straightforward document.
A renter who earns commissions might need to provide pay stubs covering several months, along with bank records showing deposit patterns. This approach helps verify an applicant's true earning capacity, though it requires more time and analysis than standard verification methods.
Many assume that non-traditional income is inherently unstable, but that's not always the case. A freelancer who's been with the same clients for years may have more predictable income than someone frequently job-hopping in traditional employment.
The real challenge isn't the income itself—it's finding the right method for verifying it. Rather than viewing commission and seasonal work as red flags, landlords and lenders who take time to properly analyze income patterns often discover these workers have strong financial stability and ability to pay their obligations consistently.
Commission arrangements vary widely—some workers earn a percentage of sales while others receive flat fees per transaction. These structures directly impact how you verify your income during the application process.
Understanding whether someone's on a pure commission model or receives a base salary plus commission matters because it affects income predictability. An income verification letter from an employer should clearly outline the commission structure, giving landlords or lenders context for evaluating earning potential rather than just looking at numbers in isolation.
Getting comprehensive income documentation is essential for accurate verification. Workers should gather recent pay stubs and tax returns, specifically the 1040 form showing total annual income, along with any 1099s for independent contractor work.
Months of bank statements—typically three to six—help establish deposit patterns and demonstrate consistent income flow. An employment verification letter from the HR department or direct supervisor should detail the length of employment, commission structure, and average earnings.
This combination of tax documents, banking records, and employer confirmation creates a complete financial picture.
Rather than focusing on a single paycheck amount, calculate earnings over 12 to 24 months to account for natural fluctuations. Add up total commission income from tax forms and divide by the number of months worked to find a realistic average.
This approach smooths out seasonal variations and one-time bonuses that might skew the numbers. When reviewing someone's income information, look for patterns—does income spike during certain quarters? Are there predictable slow periods?
This analysis helps determine if the average income amount truly reflects what a tenant can afford for monthly rent.
Verifying income for seasonal workers is tricky because their earnings change a lot. Unlike regular employees, they don't have a steady income all year. This makes it hard to figure out their average earnings.
Seasonal workers face obvious gaps in their work history, which doesn't mean they lack financial stability. Instead of viewing non-working periods as problematic, focus on annualized income and savings patterns.
An income verification letter should cover the full year, showing total earnings even if concentrated in specific months. Many seasonal workers budget carefully, setting aside money during peak earning periods to cover expenses year-round.
When evaluating a rental application, consider whether someone has consistent year-over-year employment with the same seasonal employer, which demonstrates reliable income even if it's not continuous.
During off-seasons, standard paystubs aren't available, so you'll need alternative income documentation. Recent bank statements showing regular deposits during working months, followed by managed withdrawals during off-periods, reveal someone's budgeting ability.
Previous year's tax documents, including the 1040 form and any 1099s, establish earning history. Some seasonal workers qualify for state unemployment benefits during off-periods, which can supplement savings.
For property management companies, requesting 12 months of bank records provides better insight than asking for recent paycheck stubs that may not exist during certain times of year.
Annualizing income creates a fair monthly average by spreading peak earnings across the entire year. Take total annual income from tax forms and divide by 12 to determine average monthly earnings, regardless of when that income was actually earned.
This calculation helps both landlords and tenants understand whether someone can realistically afford rent throughout the year. A renter who earns $40,000 working May through October has an annualized monthly income of roughly $3,333—not $0 during winter months.
This approach reflects actual earning capacity rather than penalizing workers for seasonal employment status.
Here's how to annualize seasonal income:
By annualizing income, lenders and others can better understand a seasonal worker's finances. This leads to more accurate and fair judgments.
When you verify income commission workers and seasonal employees submit, you need more than just documentation—you need confidence that what you're reviewing is legitimate. Fraudulent rental applications cost landlords thousands in lost rent and legal fees every year, and fake income documentation has become alarmingly sophisticated.
Our comprehensive Fraud Prevention Guide gives you the tools to spot forged documents before they cost you money. You'll learn exactly what red flags to watch for in tax documents, paystubs, and employment verification letters from non-traditional workers.
What you'll discover inside:
Verify non-traditional income without fraud risk. Get our Fraud Prevention Guide.
[Download Free Guide Now]
Don't let fraudulent applications compromise your tenant screening process. Get the knowledge you need to confidently verify tenant income while protecting your rental business.
For those with commission-based or seasonal jobs, getting the right documents is key. Verifying income for these workers means looking at their financial records closely. This helps figure out if they have stable income.
Tax documents provide the most comprehensive view of annual income for non-traditional workers. The 1040 form shows total income, while Schedule C details business income and expenses for independent contractors and freelancers.
These forms help verify tenant income by showing what someone actually earned after business expenses, not just gross revenue. For the tenant screening process, requesting two years of returns reveals income trends—is earning increasing, decreasing, or staying consistent?
This historical perspective helps landlords make informed decisions about someone's future ability to meet income requirements.
Recent bank statements serve as a reliable method for confirming that income reported on applications and tax returns actually makes it into someone's account. Three to six months of bank statements reveal deposit patterns, showing whether income arrives regularly or sporadically.
For property management teams, banking records can verify that deposits match amounts listed on pay stubs and tax returns, confirming the applicant's stated income matches reality. These statements also show savings habits and financial management skills—important factors when assessing a renter's long-term reliability beyond just current earnings.
For commission-based workers, contracts and agreements document earning structures and provide context for income verification. An employment verification letter combined with the actual commission agreement clarifies how income is calculated and paid out.
These documents help answer questions about income and employment stability that might not be obvious from paystubs alone. When an HR department or direct supervisor confirms both employment status and commission terms in writing, it strengthens the verification process.
This documentation becomes particularly valuable during the application process when information about the applicant helps distinguish between genuinely variable income and unstable employment.
Verifying income for commission workers needs a deep understanding of laws. These laws cover fair housing, lending, and data privacy. It's key to follow these rules to keep the process fair and open.
Fair housing laws require consistent treatment across all rental applications, regardless of income source. You can't automatically reject commission-based or seasonal workers simply because their income looks different from traditional employment.
The tenant screening process must apply the same income requirements to everyone—if you accept salaried workers earning three times rent, you should accept commission workers whose average income meets that same threshold.
Landlords and property management companies need documented policies showing they evaluate income fairly. This means using the same verification methods and criteria whether someone receives a steady paycheck or earns through commissions.
Collecting extensive income documentation means handling sensitive financial data responsibly. Tax documents, months of bank statements, and employment verification letters contain personal information that requires secure storage and limited access.
When landlords or property management firms gather income information during the application process, they need proper data protection measures in place. This includes secure file storage, restricted access to information about the applicant, and clear policies about how long documents are retained.
Failing to protect this data not only violates trust but can expose you to legal liability if sensitive information is compromised.
The biggest risk in verifying variable income is unintentional bias against non-traditional workers. When you verify tenant income, using inconsistent standards between salaried employees and commission workers can constitute discrimination.
If you require months of bank statements from seasonal workers but only request W2s from traditional employees, you're creating disparate treatment. The solution is standardizing your method for verifying income across all applicants.
Focus on ability to pay rather than employment type, use annualized figures for fair comparison, and document your reasoning when making decisions based on income and employment verification.
Verifying income that changes, like commissions or seasonal jobs, is key. Lenders and property managers need to follow best practices. This ensures accuracy and fairness in rental and lending decisions.
Create a clear policy for what income documentation you need from all applicants, regardless of employment type. This might include requesting pay stubs and tax returns from everyone, along with months of bank statements when income is variable.
Train anyone involved in the tenant screening process to follow the same procedures, ensuring that salaried workers, commission earners, and seasonal employees all go through identical review steps. Using a standard letter template for employment verification letters helps ensure you're collecting consistent income information from all employers.
This standardization protects both landlords and applicants by removing ambiguity from the application process.
Modern verification platforms can simplify the process by pulling income data directly from payroll systems and financial institutions. These tools access employment and income information faster than traditional methods, reducing the time needed to verify an applicant's financial situation.
Automated systems can analyze recent bank statements, tax forms, and paystubs to calculate average income across multiple months, catching inconsistencies that manual review might miss. For property management companies handling numerous applications, technology streamlines background checks and income verification while maintaining consistency.
However, these tools work best when combined with human judgment, particularly for non-traditional income that requires contextual understanding.
Finding the sweet spot between protecting your interests and treating applicants fairly means looking at the complete financial picture. Rather than rejecting renters with variable income outright, use annualized figures and longer review periods to assess true financial stability.
Consider that proof of income is one factor among many—someone with strong credit, good rental history, and substantial savings might be lower risk than a salaried worker living paycheck to paycheck. The goal is making informed decisions that account for income type without automatically penalizing non-traditional workers.
When you verify your income requirements are reasonable and consistently applied, you create a fair process that effectively manages risk while expanding your pool of qualified tenants.
By following these best practices, organizations can check variable income well. They can also keep the process fair and open.
Verifying income for commission and seasonal workers requires more nuance than traditional employment verification, but it's entirely manageable with the right approach. Landlords and property management companies who take time to understand variable income patterns often discover these renters are just as reliable as salaried employees—they just need documentation that reflects their actual earning capacity.
The key is treating income and employment verification as a comprehensive process rather than a checkbox exercise. By gathering complete income documentation, including tax documents, months of bank statements, and detailed employment verification letters, you can make informed decisions about someone's ability to pay rent.
When your tenant screening process applies consistent standards across all rental applications, you protect yourself legally while opening your properties to qualified renters who might otherwise be overlooked. A thoughtful, fair approach to income verification creates better outcomes for everyone involved.
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