Types of Unearned Income

These income sources are different from receiving a regular salary in a 9-to-5 job.

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.

What is Unearned 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

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.

Dividend Income

Retirement Income

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

Unemployment Benefits

Unemployment benefits are paid to individuals who lose their jobs through no fault of their own.

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