Earned Income Definition

Short Definition
Earned income is the funds you collect from your employer or your own business or farm for work done.

Extended Definition
The IRS is very specific about the money that is considered earned income (e.g., wages, salary, bonuses, commissions, etc.); and the money that is considered to be unearned income (e.g., dividends, unemployment benefits, etc.). The distinction between earned and unearned income becomes important when applying for earned income tax credit (EITC or EIC).

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What Is Earned Income?