what is the difference between earned and unearned income 
earned income comes from working while unearned income does not the irs may treat each type of income differently for tax purposes tax rates vary among sources of unearned income most unearned income sources are not subject to payroll taxes and none of them are subject to employment taxes such as social security and medicare unearned income cannot be used to contribute to a qualified retirement account such as an ira 141516the bottom lineearned income is any income that you receive from a job or self employment it can include wages tips salary commissions or bonuses it is different from unearned income which comes from things like investments or government benefits the two types of income are taxed differently by the irs if you have earned income that is below a certain threshold you may qualify for the earned income tax credit this is a refundable tax credit that can lower your tax bill or result in a tax refund 