Unearned Income - What Is It & 9 Types You Need!

Many people dream about living off passive income. Alternatively, you can be lucky and receive a large inheritance or win big at a casino.

Some income sources are different from receiving a regular salary in a 9-to-5 job. What is unearned income, and how does it differ from earned income. There is a definition of both as per IRS!


WHAT is unearned income?

Black Star

The IRS views unearned income as income from sources other than those requiring personal effort, ie. job or employment. 


WHAT ARE THE types of unearned income?

1. Investment Income

Investment income is the profit generated from the sale of real estate or stocks.

2. Long-Term Capital Gain Distribution

Mutual funds pay capital gains distributions to shareholders.

3. Dividend Income

Dividend income results from money paid to stockholders from the dividends paid by companies. An investor can generate passive income and possibly live off dividends.

4. Retirement Income

Retirement income is derived from pensions, annuities, and distributions from 401(k) plans and Individual Retirement Accounts (IRAs).

that's not all! There are 5 more types of unearned income.  swipe up