Definition of Active income:
Active income refers to income received from performing a service and includes wages, tips, salaries, commissions, and income from businesses in which there is material participation. An accountant who works for a monthly paycheck, for example, receives active income.
Total income including salary (wages) and commissions, but excluding dividends, interest, and rents.
There are three main categories of income: active income, passive income, and portfolio income. These categories are important because losses in passive income generally cannot be offset against active or portfolio income.
How to use Active income in a sentence?
- The most common types of income are active, passive, and portfolio.
- Key qualifications for business income to be considered active are the number of hours worked, who does the majority of the work, and how many hours the taxpayer works in the business.
- Active income includes income earned as a salary, wages, commissions, and tips.
Meaning of Active income & Active income Definition