Earned Income

AAA

DEFINITION of 'Earned Income'

Income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses. This is the opposite of unearned income.

INVESTOPEDIA EXPLAINS 'Earned Income'

Earned income includes any income that a person or company receives for work they have done. If your boss gives you an advance on your next check, this would be considered unearned income because you haven't yet done anything to earn it.

RELATED TERMS
  1. Suspended Loss

    A capital loss that cannot be realized in a given tax year due ...
  2. Business Income

    Any income that is realized as a result of business activity. ...
  3. Earned Income Credit - EIC

    A tax credit in the United States which benefits certain taxpayers ...
  4. Active Income

    Income for which services have been performed. This includes ...
  5. Unearned Income

    Any income that comes from investments and other sources unrelated ...
  6. Unearned Revenue

    When an individual or company receives money for a service or ...
Related Articles
  1. Surviving The IRS Audit
    Taxes

    Surviving The IRS Audit

  2. Choosing The Best Disability Insurance ...
    Options & Futures

    Choosing The Best Disability Insurance ...

  3. 3 Simple Steps To Building Wealth
    Options & Futures

    3 Simple Steps To Building Wealth

  4. Is there a limit on the amount of disability ...
    Home & Auto

    Is there a limit on the amount of disability ...

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center