Understanding Passive vs Earned Income

Which of the following is considered a form of passive income?

• Income from rental properties

• Salary from a corporate job

• Consulting fees

• Commission from sales

What is a key difference between passive and earned income?

• Passive income requires active work, while earned income does not

• Earned income is taxed at a lower rate than passive income

• Passive income is generated with little to no effort, while earned income requires active work

• Earned income is only from investments, while passive income is from employment

Which of the following scenarios best illustrates earned income?

• Receiving rental income from a property you own

• Earning interest from a savings account

• Getting paid for hours worked at a retail store

• Receiving royalties from a book you wrote

Identify the type of income: A person receives monthly payments from a trust fund set up by their grandparents.

• Earned income

• Passive income

• Active income

• Portfolio income

Which of the following is NOT considered passive income?

• Rental income from a property

• Salary from a job

• Dividends from stocks

• Royalties from a published book

How does passive income typically differ from earned income in terms of effort required?

• Passive income requires more effort than earned income

• Earned income requires more effort than passive income

• Both require the same amount of effort

• Neither requires any effort

Which of the following is an example of earned income?

• Interest from a savings account

• Salary from a teaching job

• Rental income from a vacation home

• Dividends from mutual funds

What type of income is generated from a side business where you actively work on projects?

• Passive income

• Earned income

• Portfolio income

• Investment income

Which of the following best describes portfolio income?

• Income from a full-time job

• Income from investments such as stocks and bonds

• Income from rental properties

• Income from freelance work

A person receives $500 monthly from a book they wrote years ago. What type of income is this?

• Earned income

• Passive income

• Active income

• Portfolio income