View all Payroll Definitions

Earned Income Definition

Earned income is the funds you collect from your employer or your own business for work done.

Earned Income Extended Definition
The IRS is specific about the money that is considered earned income (e.g., wages, salary, bonuses, commissions, etc.) and the money that is considered unearned income (e.g., dividends, unemployment benefits, etc.).

The distinction between earned and unearned income becomes important when applying for earned income tax credit (EITC or EIC).

Last Updated By

Rachel Blakely-Gray | Apr 11, 2023

Check out Our Accounting Software

Starts at $20/month
30-day free trial
Free USA-based support
Unlimited number of users
Easy to use, but powerful
Very happy customers!

See a Demo