Earned income refers to the money that individuals receive from working, which includes wages, salaries, bonuses, and tips. This type of income is typically generated through employment or self-employment, where individuals provide services or labor in exchange for compensation. Unlike passive income, which comes from investments or rental properties, earned income is directly tied to the effort and time put into a job. It is subject to income tax and is often reported on tax forms such as W-2 for employees or Schedule C for self-employed individuals.