Earned income: This is income that is earned through active work, such as wages, salaries, bonuses, commissions, and tips. This type of income is typically associated with employment, self-employment, or running a business.
Passive or Unearned income: This is income that is received without any direct involvement in active work. Examples of unearned income include dividends, interest, capital gains, rental income, and government benefits such as social security, disability, or unemployment benefits. This type of income is typically associated with investments, passive income streams, or government support.
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