The Internal Revenue Service (IRS) considers these sources of income and several others as unearned income. What is unearned income, and how does it differ from earned income.
Unearned income is income from sources, not from employment or a job. The IRS views unearned income as income from sources other than personal effort.
Investment income is the profit generated from the sale of real estate or stocks. An investor selling an asset for profit will generate capital gains from the sale.
This money comes from selling stocks, bonds, or other assets owned by the mutual fund.
Long-Term Capital Gain Distributions
Dividend income results from money paid to stockholders from the dividends paid by companies.
Retirement income is derived from pensions, annuities, and distributions from 401(k) plans and Individual Retirement Accounts (IRAs).