Earned Income

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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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What is the difference between gross income and earned income?

    Prior to preparing and filing a tax return, do yourself a favor by gaining an understanding of commonly used tax terms including ... Read Full Answer >>
  2. How are payments calculated on a Canadian Pension Plan (CPP)?

    If you are looking to calculate how much you are going to receive from your Canada Pension Plan, or CPP, benefits, the best ... Read Full Answer >>
  3. Is there a limit on the amount of disability insurance that I can buy?

    Disability insurance policies are designed to partially replace your income in the event that you become disabled and cannot ... Read Full Answer >>
  4. What is the difference between AGI (adjusted gross income) and gross income?

    In the United States, individuals pay taxes based on their adjusted gross income, or AGI, rather than their gross income. ... Read Full Answer >>
  5. Does my employer's matching contribution count towards the maximum I can contribute ...

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