Understanding Passive Income
Passive income is money earned from sources in which the taxpayer does not materially participate. This can include rental income, royalties, dividends, and interest from investments. As a cpa in trinity florida, it is important to correctly categorize passive income on your tax returns to ensure compliance with IRS regulations.
Recognizing Non-Passive Income
Non-passive income, on the other hand, is income earned from sources in which the taxpayer is actively involved. This can include wages, salary, bonuses, and self-employment income. It is important to distinguish between passive and non-passive income as each is taxed differently by the IRS.
Key Differences Between Passive and Non-Passive Income
One key difference between passive and non-passive income is the level of involvement required from the taxpayer. Passive income does not require active participation, while non-passive income does. Additionally, passive income is generally subject to different tax rates and may be eligible for certain tax deductions and credits.
How Albert CPA Can Help
If you are unsure how to categorize your income or need assistance with your taxes, Albert CPA is here to help. As the best accountant in Trinity, FL and Tampa Bay, we specialize in handling bookkeeping, payroll, and sales and income tax needs for individuals and businesses alike. Contact us today to schedule a consultation and let us take the stress out of tax season for you.
