In financial terms, passive income is earnings derived from a rental property, limited partnership or other enterprise in which a person is not actively involved.The IRS says passive income can come from two sources: rental activities or “trade or business activities in which you do not materially participate.”

Passive income is earned income. The IRS says passive income can come from two sources: rental activities or “trade or business activities in which you do not materially participate.” In financial terms, passive income is earnings derived from a rental property, limited partnership or other enterprise in which a person is not actively involved.

Passive Income Defined

Passive income is the money you earn while you sit on your butt and do nothing. Yes, that means it’s time for lunch!

The term “passive” refers to the fact that you don’t have to work at earning this type of money—it just comes in automatically. If you already have an established business (that puts out enough cash flow), then passive income may be what gives you the freedom to quit working altogether.

Passive income differs from earned income and portfolio income in a variety of ways. Passive income is generally defined as a stream of income earned with little effort, and it is referred to as progressive passive income when there is little effort needed from the individual receiving the passive income in order to grow the stream of income. Examples of passive income include rental income and any business activities in which the earner does not materially participate during the year.

Passive income differs from earned income and portfolio income in a variety of ways. Passive income is generally defined as a stream of income earned with little effort, and it is referred to as progressive passive income when there is little effort needed from the individual receiving the passive income in order to grow the stream of income. Examples of passive income include rental income and any business activities in which the earner does not materially participate during the year.

You can typically earn active or passive investment returns by selling an asset that increases in value over time or by lending money for an asset that produces interest over time or both.

Passive Income = Money that flows into your pocket without you having to do much work (or sometimes even no work at all)

Passive income, also known as residual income, is money that flows into your pocket without you having to do much work (or sometimes even no work at all).

Passive income usually comes from two key sources: royalties and capital gains. Royalty payments are made when someone buys or licenses a product or service from you. For example, when the publisher of this book pays me for the rights to publish and sell it, I’m earning royalty income. Capital gains on the other hand are profits that result from selling an asset such as a stock or real estate property where there has been appreciation over time since its original purchase price

Passive Income – Allowing money to work for you rather than trading your time for money (9-5 JOB)

Passive income is money that you earn while you sleep. It is money that you do not have to work for, and it is generated without your direct involvement.

Some examples of passive income:

• Selling products on Amazon or eBay
• Selling ebooks on Amazon or other platforms
• Selling a course or training program online

What is active income exactly

Let’s break it down.

Active income is money that you earn by working. In other words, active income is money you get from getting a second job or working overtime at your current job. This type of income can be earned in a variety of ways: by working as an employee, being self-employed (a freelancer), or buying and selling assets (like real estate).

How to Use This Article

The majority of Americans have a primary source of income that they earn through their job. For example, if you work as an accountant at a large accounting firm, then your primary source of income is active income—you earn it from your job.

Passive income is money earned from something other than your job. An example of this would be if you own rental properties or have an online business where people buy things from you and send payment directly to you. In both cases, the passive income comes in regardless of whether or not you’re working.

Active and passive sources do not get treated equally by the IRS though (the U.S. tax agency). Active sources are taxed as ordinary income while passive sources enjoy lower rates when it comes time to pay taxes on them at year’s end.