Earned Income
Earned Income means:
a tax term describing “sweat of the brow” income, which requires obvious effort on the part of the recipient. This includes all income generated by providing goods or services, especially wages and salaries but also net profit from a trade or business; it is contrasted with income received as dividends, for instance. The term refers to self-employment income as defined in U.S. Internal Revenue Service (IRS) § 1402(a), and can also refer to pension or annuity income. Former IRC (check if this IRC provision is current here) §401(c)(2). Former IRC (check if this IRC provision is current here) §§32 and 911.
See also other Tax Terms and Definitions in U.S.A.
passive income; contrast with the entry unearned income.
In other words, compensation, such as salary, commissions and tips, the taxpayer receive for his or her personal services. This is distinguished from “unearned” income such as interest, dividends and capital gains. Includes, therfore, wages, salaries, tips, includible in gross income, and net earnings from self-employment earnings or for personal services.
U.S. and other Developed Countries International Tax Meaning
Income or compensation derived from personal services in an employment, trade, business, profession or vocation. (cf. investment income).
See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.
Description and Definition of Earned Income
All the money you earn including any wages, salaries, commissions, tips, net earnings from self-employment, and any other income received for personal services as opposed to unearned income from sources such as investments. You must have earned income to have a deductible IRA or to claim the earned income credit.
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