Income can be categorized into various types based on its source, nature, and purpose. Here are some common types of income:
- Earned Income: Income generated through active work or services provided, such as salaries, wages, tips, and commissions.
- Passive Income: Income earned from investments or business activities in which the individual is not actively involved, such as rental property, royalties, dividends, and interest income.
- Portfolio Income: Gains from investments in stocks, bonds, mutual funds, and other financial instruments. It includes dividends, interest, and capital gains from the sale of assets.
- Investment Income: Returns on invested capital, including dividends, interest, capital gains, and any other form of profit generated from investments.
- Business Income: Profits earned from a business or self-employment activities after deducting expenses, salaries, and other operational costs.
- Rental Income: Revenue received from renting out property or assets to tenants or lessees.
- Royalties: Payments received for the use of intellectual property such as patents, copyrights, trademarks, or artistic work.
- Capital Gains: Income derived from the sale or exchange of capital assets, like stocks, real estate, or other investments, at a higher price than the original purchase price.
- Annuity Income: Regular payments received from an annuity contract, usually purchased from an insurance company.
- Pension Income: Regular payments received by retirees from an employer's pension plan or government-sponsored retirement plans.
- Gifts and Inheritance: Money or assets received as a gift from family, friends, or inheritance from a deceased person's estate.
- Alimony and Child Support: Regular payments received as financial support from a former spouse or parent for the maintenance of oneself or dependent children.
