By Natasha
Passive
income is income resulting from cash flow that is received on a regular basis
that requires minimal to no effort at all by the recipient to maintain it. The
American IRS (international revenue service) categorizes income into three
different groups: active income, passive income, and portfolio income. Passive
income is taxable, what many people don't know is the difference between
ordinary income and passive income. The federal government taxes ordinary
income up to 35% and passive income at 15%. You can get passive income by
government benefits, rental property earnings, pension, etc. Passive income is
important because it's an easier way to make money that isn't active income and
it helps people be financially stable because it's a reliable source of income.
You also get to keep more passive income because it's taxed a lot less then
active income.
