Tax guide

Types of Income

What are Types of Income?

There are two kinds of income: Earned income and unearned income. Earned income is money you make while actively working, like being employed or running your own business. Unearned income typically includes investment, retirement, and passive income. Investment income includes interest and dividends earned on bank or investment accounts, and also capital gains from the sale of stock or other assets. Retirement income includes distributions from 401Ks, pensions, annuities, and social security payments. Passive income includes some income from rental properties and other assets that generate income without a lot of maintenance. Unemployment income and gambling winnings are also considered unearned income.

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