Unearned income is highly useful for anyone looking to accumulate wealth, but it does come with tax consequences. Here’s the deal. What Is Unearned Income? What’s the Difference Between Unearned ...

Your money might end up in the same place, but it comes from different, earned and unearned, sources. Photo:TaxCredits.net. Understanding the difference between what is unearned income and what is ...

Unearned income, also known as passive income, is derived from sources other than employment or business operations and can act as a financial safety net during times of job loss or financial crisis.

Earned income refers to the money that you make from working, including salaries, wages, tips and professional fees. Unearned income, comparatively, is the money that you receive without performing ...

In accrual accounting, revenue is included as income when it is generated. The work is done, the company is paid, and the amount is entered as income. Only earned revenue – money exchanged for a good ...

Your taxable income is your federal tax liability based on both earned and unearned income received during the tax year. An individual’s taxable income is the amount of money they’ve received over the ...

Many businesses receive advance payment for products and services. In such a case, the monies received are not earned income because the business will provide the products or services at a later date.

Understanding the difference between what is unearned income and what is earned income is important, because they receive different tax treatments. The difference matters for other tax considerations, ...