Listen to a Business English Dialogue about Unearned income
Michael: Hi Violet, do you know what “unearned income” means in finance?
Violet: Yes, I think it’s income that is received without having to perform any work or provide a service in exchange.
Michael: That’s correct. Unearned income can include things like interest, dividends, rental income, or capital gains.
Violet: Are there any tax implications for unearned income?
Michael: Yes, unearned income is typically subject to taxation, although the tax rates and treatment may vary depending on the type of income and the individual’s tax situation.
Violet: How does unearned income differ from earned income?
Michael: Earned income is income that’s received from performing work or providing services, while unearned income is derived from investments or other sources without direct labor.
Violet: Can you give an example of unearned income?
Michael: Sure, examples of unearned income include interest earned on savings accounts, dividends received from stocks, or rental income from properties.
Violet: How is unearned income reported for tax purposes?
Michael: Unearned income is typically reported on tax returns and may be subject to different tax rates or treatment than earned income.
Violet: Are there any strategies for maximizing unearned income?
Michael: Some strategies include investing in dividend-paying stocks, high-yield savings accounts, or rental properties to generate additional unearned income.
Violet: What are the advantages of having unearned income?
Michael: Unearned income can provide a passive source of income that can help diversify one’s revenue streams and build wealth over time.
Violet: It seems like understanding unearned income is important for managing finances and planning for taxes.
Michael: Absolutely, knowing how unearned income works can help individuals make informed decisions about their investments and financial strategies.