There are two major types of income. Earned and unearned. Examples of earned income include wages, tips, and compensation. Unearned income comes from what you own rather than from what you do such as interest, dividends and rents. Earned income is classed as active income. Unearned income is classed as passive income. Passive income is not subject to self-employment tax which means that the money you earn from your rentals is not going to be adding to your social security retirement in the future. Passive losses are limited.
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