Unearned Income

About Unearned Income:

Unearned Income (or unearned revenue) is the investment income from sources other than trade or business, wages, salaries, tips, and other employee compensation. Interest, dividends, royalties, and capital gains may be called unearned income. In general, payments classified as income which are not considered earned, including unemployment compensation, taxable Social Security benefits, taxable pensions, annuity income, canceled debt, unearned income from a trust, taxable interest, dividends, and capital gains. Before 1981 a higher tax rate was applied to unearned income than to earned income, but this distinction no longer exists. Former Tax Regulation (check if this Reg. is current here) §1.451-5.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.

See Tax Rate and Tax Rate.

Description and Definition of Unearned Income

Income from investments, such as interest, dividends, capital gains, or rents, as opposed to earned income, such as wages, tips, and salaries.

Resources

See Also

Further Reading

• Unearned Income in the West's Tax Law Dictionary
• Unearned Income in “A Dictionary of Taxation”