Unearned income refers to personal income that is not earned through employment or active work.

This type of income includes sources such as taxable interest, dividends, rental income, unemployment benefits, capital gains, and certain government payments.

Unlike wages or salaries, unearned income is typically generated from investments or other non-work-related sources. It is still subject to taxation and must be reported on tax returns.

Understanding unearned income is important for financial planning, as it can affect tax liability, eligibility for certain benefits, and overall income reporting. Properly managing and tracking this income helps individuals stay compliant with tax regulations and plan for future financial goals.