Home > personal finance > Unearned Income

Unearned Income

February 8th, 2010

Unearned income is making money that isn’t the result of a wage, salary, or tip. Deposits for work that is to be done is also considered to be unearned income. For example a deposit to begin construction on a building is unearned income. After the job is completed and the contractor is paid the deposit becomes earned income.

For most people though unearned income comes in the form of interest payment or dividends. Interest from savings accounts, checking accounts, and money market accounts is considered unearned income. In addition profits from stocks, bonds, or currency exchanges fall into this category as well.

Property rental is another source of unearned income. It’s considered unearned because the owner of the property doesn’t have to put forth any direct effort in receiving payments. Indirect income is another term used to describe rental property income.

Unearned income doesn’t mean that it isn’t taxable. In the US you have to pay taxes on unearned income just like any other revenue source. Different rates may apply depending on the source of your unearned income.

personal finance

  1. May 23rd, 2012 at 05:47 | #1

    There were a few adjustments we made to the heedar and it should be fine now. I noticed that you have a tax software review site. I did not see anything about the type of returns done with the various software programs. From our professional experience the commercial grade software is okay for basic returns, however, anything more complicated requires the assistance of a tax professional.How do we know? A majority of clients that come to see us with audit requests from the IRS did their own taxes.

  1. No trackbacks yet.