Prepare for the Jackson Hewitt Tax Test with our comprehensive study guide featuring multiple-choice questions, hints, and detailed explanations. Ace your examination with confidence!

Multiple Choice

Which of the following is an example of unearned income?

Unearned income is money you receive without actively working for it. Interest from a bank account, unemployment benefits, retirement income, and pension payments all fit this because they come from savings, government programs, or retirement arrangements rather than wages or services you provide. Wages from a job and self-employment income come from performing work, so they are earned income. Capital gains come from selling investments and, while not tied to current labor, are a form of investment income rather than compensation for work.

Unearned income is money you receive without actively working for it. Interest from a bank account, unemployment benefits, retirement income, and pension payments all fit this because they come from savings, government programs, or retirement arrangements rather than wages or services you provide. Wages from a job and self-employment income come from performing work, so they are earned income. Capital gains come from selling investments and, while not tied to current labor, are a form of investment income rather than compensation for work.