What is passive income?

Passive income is income that can be obtained automatically without too much time, energy and care.

The IRS divides income into three categories, namely, active income (labor income), passive income and comprehensive income. It defines passive income as "you are not involved in a lot of trade or business activities".

Other financial institutions and government agencies also realize that passive income, as a kind of income, is the result of capital growth or related to negative tax deduction mechanism. Passive income is usually taxable income.

detailed

Passive income is a kind of income that can be obtained regularly as long as it is maintained with a little effort.

Here are some examples of passive income:

You can make money from business instead of becoming a boss or businessman directly;

Real estate rent;

Royalties, licensing fees for authorized patents or other intellectual property rights collected for publishing books;

Publish online advertisements on the website to earn advertising fees;

Residual income refers to the income generated by products or services regularly promoted by salespeople, and users must continue to buy products or services regularly before they can continue to use the benefits brought by products or services;

Dividend and interest income from securities such as stocks and bonds is usually called portfolio income, and is usually regarded as passive income or not. In the United States, portfolio income is considered to be a form of income different from passive income;

Pension.

The IRS has a specific definition of passive income, which is not completely consistent with the above list. For example, royalties, according to the service guide, are generally considered not passive. In addition, there are interest, dividends, stock and bond income, lottery bonuses, wages, labor remuneration, commissions, retirement income, deposits and so on. It is all passive income.