Passive income is one of the three most recognized types of personal income–joining active income and portfolio income. The word “passive” in this case refers to the relationship between the income and the person receiving it: it is a passive relationship, or one might say that there is very little relationship at all.
Unlike active income, which is directly connected to duties performed or services rendered, passive income is regular income derived from sources upon which the recipient has little direct influence. It can be ownership of or partnership in a rental property, or investment in a dividend-bearing stock.
