Earned Income

Business, Legal & Accounting Glossary

Definition: Earned Income


Earned Income

Quick Summary of Earned Income


Compensation from participation in a business, including wages, salary, tips, commissions and bonuses. opposite of unearned income.




Full Definition of Earned Income


Earned income is wages, salary, tips, fees or other compensation generated as a result of the active performance of labour or a service. Earned income is payment for work or service already completed. Earned income also includes profits from your own business or trade which you have materially participated in producing. Earned income ceases if the labour or service for which it is paid stops. Earned income can include money, property, and even an exchange of goods of services. Another term for earned income is active income. Earned income is in contrast to passive income or unearned income, such as interest, dividends, annuities, rents and other income from savings or investments which continues regardless of whether or not work or a service is actively performed.


Examples of Earned Income in a sentence


I had a lot of earned income and it made me and my family very happy, because I had put a lot of work into my company.

You children need to thank your father every day, it is because of how hard he is always working and all the earned income he has that you have nice things.

While most Americans report the vast majority of their compensation in their taxes as earned income derived from wages or salary, some wealthy Americans report more unearned income (e.g. stocks, bonds, etc.) in their tax filings.


Related Phrases


disqualifying income
1040 Form Schedule EIC
standard of living bubble
earnings before interest, taxes, and depreciation (EBITD)
unearned revenue
941-SS Form
1040 Form Schedule M
average indexed monthly earnings (AIME)
earned income tax credit
foreign earned income exclusion


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https://payrollheaven.com/define/earned-income/ (accessed: March 29, 2024).
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Earned Income. PayrollHeaven.com. Retrieved March 29, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/earned-income/

Definition Sources


Definitions for Earned Income are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 30th October, 2021 | 0 Views.