Active Income

What is Active Income?

The IRS considers revenue or income generated from a person’s direct effort or investor’s active participation in a business’ operations as active income. Salary and wages from regular employment or self-employment are primary examples of active income. But the term also applies to investments that require active management by the property owner, such as some investment real estate.

This label comes into play when considering tax shelters, which contrasts active income with portfolio and passive income (the three types of ordinary income classified by the IRS).

For more information, see also the following entries:

  • :Internal Revenue Service:
  • :Investment Property:
  • :P assive Income:
  • :P ortfolio Income:
  • :Real Estate:
  • :Self-Employment:
  • :Tax Deduction:
  • :Tax Shelters:


Comments are closed.