Earned Income Versus Passive Income
In fact the internal revenue service categorizes income into three broad types earned income passive income and portfolio income.
Earned income versus passive income. If an investor has a real estate property that generates 50 000 in passive income they can use a 1031 exchange to legally defer taxes and then buy another property. While passive and portfolio are income is generated via investments earned income is either employment w2 or self employment 1099 income. Passive income vs earned income published on july 29 2020 latest vids about people make money income opportunities creating passive income sources of passive income and passive income vs non passive income passive income vs earned income. Another disadvantage in regards to taxes when it comes to earned income is the limited amount of deductions available.
Earned income is sometimes referred to as active income.