Passive income is in
come received on a regular basis, with little effort required to maintain it.
Some examples of passive income are:
Earnings from a business that does not require direct involvement from the owner or merchant;
Rent from property;
Royalties from publishing a book or from licensing a patent or other form of intellectual property, such as computer software products
Earnings from internet advertisements on websites;
Dividend and interest income from owning securities, such as stocks and bonds, is usually referred to as portfolio income;
Pensions.
The IRS has a specific definition of passive income that excludes some of the incomes listed above. Royalties, for example, are, according to the Service guide, generally non-passive in nature. Additionally, interest, dividends, annuities, and gains from stocks and bonds, lottery winnings, salaries, wages, commissions, retirement income, guaranteed payments for services are considered by the IRS to be non-passive.