Earned Income
Earned income is money that is earned through employment or self-employment. It is the most common form of income for most people, and it is taxed differently than other forms of income, such as investment income or capital gains. Earned income is typically taxed at a higher rate than other forms of income, and it is subject to Social Security and Medicare taxes.
History of Earned Income
The concept of earned income has been around for centuries. In the United States, the first income tax was enacted in 1861 to help fund the Civil War. Since then, the federal government has relied on income taxes to fund its operations. The Internal Revenue Service (IRS) was established in 1862 to collect taxes and enforce the laws. The IRS defines earned income as wages, salaries, tips, and other forms of compensation received for providing services.
Comparison of Earned Income to Other Types of Income
| Type of Income | Tax Rate |
|---|---|
| Earned Income | Up to 37% |
| Investment Income | Up to 20% |
| Capital Gains | Up to 20% |
Summary
Earned income is money that is earned through employment or self-employment. It is the most common form of income for most people, and it is taxed differently than other forms of income. For more information about earned income, you can visit the Internal Revenue Service website or consult a tax professional.
See Also
- Wages
- Salaries
- Tips
- Compensation
- Investment Income
- Capital Gains
- Social Security
- Medicare
- Income Tax
- Internal Revenue Service (IRS)
