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On the other hand, Investopedia active income is defined as income received for performing work or performing a job or service. Examples include salaries, hourly pay, tips, wages, and commissions ...
Passive income is often derived from work that one does not personally do. Stock-based dividends, for example, are typically based on regular business operations by real employees who are paid a salary for real work. But these dividends still serve as a passive income for stockholders, as the stockholder has done no physical work for this income.
Passive income and portfolio income are similar in that they both involve little effort to generate income. The big difference is that portfolio income tends to come from investments. In either ...
Dividend Income: Investing in stocks that pay dividends can provide a steady stream of passive income. Dividends are generally taxed at a lower rate than ordinary income, depending on your tax ...
Portfolio income: Portfolio income is derived from selling assets, and it represents the difference between the selling price of an asset and the price at which it was originally purchased. Passive income: Passive income is money received without significant active effort or involvement from the recipient. It includes income from sources such ...
The key to effective financial planning are two primary types of income: Passive and non-passive. It's important to understand both passive and non-passive income types that you may have and how ...
The use of the word "including" also highlights this expansive definition of "gross income." Under Internal Revenue Code § 7701(c) , "[t]he terms 'includes' and 'including' when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined."
Image source: Getty Images. Some people will tell you that the idea of passive income is a myth. But that's just plain wrong. It's more than possible to set yourself up with income you don't have ...