Survivors to Thrivers

Income Pathways

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Earned Vs. Unearned Income

Some people earn income through employment or by being self-employed. Other people have retirement savings, social security or other forms of unearned income. What happens when one has no income due to a job loss? What if one is disabled and must reduce one’s workload or can no longer work anymore?

This section on income pathways summarizes earned and unearned income and how one may go about finding income if one doesn’t have it.

What is Earned Income?

According to the Internal Revenue Service (IRS), “there are two ways to get earned income: you work for someone who pays you, or you own or run a business or farm.” It also includes certain disability payments.

The “IRS considers disability retirement benefits as earned income until you reach minimum retirement age. Minimum retirement age is the earliest age you could have received a pension or annuity if you did not have the disability.  After you reach minimum retirement age, the IRS does not consider disability retirement payments as earned income.”

What is Unearned Income?

According to the IRS, unearned income “includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.”

Other programs which provide income are public assistance programs, such as Temporary Assistance for Needy Families (TANF) and General Assistance, also known as General Relief and other names. This section will explore the different types of income that are generally referred to as “unearned income”.

In addition to discussing income programs, this section will explore other ways to obtain money, including COVID-19 stimulus payments, reverse mortgages, and finding lost money, among other methods.

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