The spelling of "unearned income" can be explained with the International Phonetic Alphabet (IPA) as [ʌnɜrnd ˈɪnkʌm]. "Unearned" is pronounced with the schwa sound [ʌ] followed by the letter combination "rn" representing the r-sound without a vowel in between. "Income" is pronounced with the open-mid front unrounded vowel [ɛ] and a stressed syllable on the first syllable [ˈɪnkʌm]. As for its definition, "unearned income" refers to any income received from investment, rental property, or other sources that doesn't require active and direct involvement in work or services.
Unearned income refers to any financial gain or income that is received without actively engaging in any work or labor. It is the opposite of earned income, which is derived from employment or self-employment activities. Unearned income is often associated with passive sources of income, such as investments, assets, or contractual agreements, in which individuals or entities receive income without actively participating in the production or provision of goods or services.
Common examples of unearned income include interest and dividends from investments, royalties from intellectual property rights, capital gains from the sale of assets, rental income from properties, and pension or retirement benefits. In these cases, individuals or entities are still entitled to receive income even if they are not actively involved in the day-to-day operations or management of the respective investments or assets.
Unearned income is typically subject to taxation by governmental authorities, and the tax rates and regulations may vary depending on the specific source of the income and the jurisdiction. While unearned income can provide individuals with financial stability and additional income sources, it is important to consider the potential risks and benefits associated with these passive income avenues and evaluate their impact on overall financial planning and management.
The word "unearned" comes from the prefix "un-" which means "not" or "lack of", and the past participle of the verb "earn", which is "earned". "Earn" originates from the Old English word "earnian", which means "deserve, merit, or acquire through effort".
The word "income" comes from the Old English word "incom", which is a combination of "in" (into) and "cumen" (come). It originally referred to anything that "comes in" or "arrives", but over time its meaning narrowed to denote financial gain or profit.
Therefore, when combined together, "unearned income" denotes income that is not acquired or gained through effort, but rather obtained without any direct effort or labor on the recipient's part.