The income that is earned from actively participating in work, such as salary and bonuses, is referred to as what?

• A. Passive income
• B. Portfolio income
• C. Active income
• D. Miscellaneous income

Answer: (C)

The income derived from actively participating in work, like receiving a salary or bonuses, is classified as active income. Active income is characterized by earnings that result from performing services or jobs. This includes wages, tips, commissions, and any bonuses received for work performed. It contrasts with other forms of income, such as passive income, which comes from investments or rental properties where the owner does not actively manage the investment, or portfolio income, which arises from investments in stocks or bonds. Understanding the distinction is crucial for tax purposes and financial planning, as different types of income may be subject to varying tax implications and regulations.