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Unearned income is a word used to describe any form of revenue that is not the result of effort or labor. It also goes by the names passive income and investment income. Interest, dividends, capital gains, rental income, royalties, pension benefits, annuities, and prize money are a few types of unearned income.
Unearned income is distinct from earned income, which includes revenue from self-employment, wages, salaries, tips, and commissions. Payroll taxes, including those for Medicare and Social Security, are levied on earned income. Although unearned income is typically exempt from these taxes, it may still be liable to other taxes like income tax and capital gains tax.
Unearned income is a word used to describe any form of revenue that is not the result of effort or labor. It also goes by the names passive income and investment income. Interest, dividends, capital gains, rental income, royalties, pension benefits, annuities, and prize money are a few types of unearned income.
Unearned income is distinct from earned income, which includes revenue from self-employment, wages, salaries, tips, and commissions. Payroll taxes, including those for Medicare and Social Security, are levied on earned income. Although unearned income is typically exempt from these taxes, it may still be liable to other taxes like income tax and capital gains tax.
