Which of the following best describes earned income?

Earned income is specifically defined as the money you earn from work performed. This includes wages, salaries, tips, and other forms of compensation received for providing services or labor. It's important to distinguish earned income from other types of income, such as investment income or passive income, which originate from sources not directly associated with active work.

By understanding this definition, individuals can navigate tax implications, as earned income is typically subject to income tax and can affect eligibility for certain tax credits or deductions. Recognizing this distinction is fundamental in the study of personal finance and investing, as it highlights how active labor contributes to an individual's financial situation compared to passive or non-labor income sources.