earned income


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Related to earned income: unearned income, Earned income credit, Earned income tax credit

Earned income

Compensation earned from employment, which includes wages, salary, tips, and compensation.

Earned Income

Income from salaries, wages, commissions, tips, bonuses, and any other source related to the work one does. Earned income specifically excludes income from investments. Earned income is taxed at one's regular income tax rate. See also: Marginal tax rate.

earned income

Individual income, such as commissions, salaries, and bonuses, that is derived as compensation for personal services. Compare unearned income.

Earned income.

Earned income is pay you receive for work you perform, and includes salaries, wages, tips, and professional fees.

Your earned income is included in your gross income, along with unearned income from interest, dividends, and capital gains. If you have earned income, you're eligible to contribute to an individual retirement account (IRA).

earned income

that part of a person's income earned from employment or self-employment (WAGES, SALARIES, FEES. COMMISSIONS and PROFITS). By contrast unearned income derives from the ownership of assets (interest and dividends from investment, rents from property, etc.) or can take the form of unemployment benefits, old age pensions, etc. See INCOME.

earned income

the return accruing to LABOUR for work done. The distinction between earned and unearned INCOME is made by the INLAND REVENUE for ease of assessment and collection of INCOME TAX. Earned income comprises WAGES, SALARIES, FEES, COMMISSION and PROFITS attributable to sole proprietors and partners within partnerships. Unearned income, by contrast, is primarily the return accruing to NATURAL RESOURCES and CAPITAL in the form of rental income, DIVIDENDS or INTEREST received. Earned income is generally taxed progressively, commencing with a tax-free income band and progressively increasing the rate of TAXATION in predetermined bands of income as income increases.

The distinction between earned and unearned income is not a valid one in economics as all FACTORS OF PRODUCTION can be said to ‘earn’ income. Even from the taxation authorities'view, the distinction has been controversial, the argument being put forward that unearned income is the result of investing from the SAVINGS of income previously earned. See INCIDENCE OF TAXATION, PROGRESSIVE TAXATION.

Earned Income

Earned income is income for services rendered as distinguished from income generated by property or other sources. Earned income includes amounts received as wages, tips, bonuses, other employee compensation, and self-employment income, whether in the form of money, services, or property. The definition of earned income is not the same for all income tax provisions. For example, alimony is treated as earned income only for purposes of determining how much an individual can contribute to an IRA.
References in periodicals archive ?
The total exclusion for earned income and housing costs, and any deduction for housing costs, is limited to the amount of foreign earned income, according to Regs.
With respect to the refundable portion of the child tax credit and the earned income credit, WFTRA also expands the earned income definition to include combat pay.
Under the Act, military personnel now have the option of treating excludable combat pay as earned income for purposes of calculating the EITC or the Child Tax Credit.
The term earned income means wages, salaries or professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation the taxpayer derived for personal services he or she rendered to a corporation that represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services.
DRM is the distribution industries leading provider of Earned Income Tracking software and solutions.
CPAs should routinely prepare Form 8867, Paid Preparer's Earned Income Credit Checklist, which specifically asks on line 3 whether the taxpayer (and spouse, if filing jointly) has a valid SSN for EIC purposes and whether the child has a valid number (referring to the instructions for line 3 for what makes a number valid).
Using both earned income tax credits and child tax credits, the earned income credit lifts more working families out of poverty than any other government program and increases their financial stability, said John Agee, IRS territory manager.
Second, the base housing amount used in calculating the foreign housing cost exclusion in a tax year is 16% of the amount of the foreign earned income exclusion limit (instead of the present-law 16% of the grade GS-14, step 1 amount).
For more information about the Earned Income Tax Credit, call 1-800-829-1040 for free Publication 596, Earned Income Credit.
Company Offers Free Tax Preparation; Joins President Clinton, Operation HOPE and Others To Boost Awareness Of The Earned Income Tax Credit
Often these agreements have a direct effect on how individuals are taxed in the host country and whether they can claim the foreign earned income exclusion and foreign tax credits (FTCs).
The SS number for a child or children who qualified the taxpayer for the earned income credit didn't match SSA records.