What is Earned vs. Unearned Income?

Earned
  • Typically from an employer (i.e. job)
  • Can also be from your own business (self-employed)
  • You generate income from some type of “work” you have done
  • Annual salary
  • Annual bonuses
  • Hourly wages
  • Tips
  • Commissions
  • Some royalty payments
Unearned
  • Referred to as passive income
  • Interest from checking/savings account
  • Dividends from stocks
  • Capital Gains
  • Pension
  • Retirement (e.g. 401K)
  • Inheritance or Gifts
  • Lottery or Prizes
  • Rental property income
  • Disability payments
  • Death benefits