Types of Income

Earned Income

Earned income is income from wages, salaries, tips and other taxable employee pay in addition to net earnings from self-employment. This is also referred to as active income.

Portfolio Income

Portfolio income is income such as interest, dividends, royalties, and gains or losses from investments.

Passive Income

Passive income is income from a passive activity, such as rental real estate. If you have a passive loss, you can use it to offset your passive income. Passive losses cannot normally be deducted against other income. If you actively participate in a passive rental activity, you may be able to deduct up to a $25,000 loss. However, this is subject to adjusted gross income limitations.

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