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Passive income is income that requires little to no effort to earn and maintain.
What is passive income irs. This can come through a number of sources such as interest from peer to peer lending royalty payments most rental income and the like. Passive income broadly refers to money you don t earn from actively engaging in a trade or business. Passive income is income earned without active involvement. By its broadest definition passive income would include nearly all investment income.
Passive income when used as a technical term is defined as either net rental income or income from a business in which the taxpayer does not materially participate and in some cases. The irs considers a revenue stream as passive if you do not have a material participation in.
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