Which of the following would be considered earned income?

Earned income refers specifically to income derived from active participation in a trade or business, typically through employment, self-employment, or other work-related activities. This includes wages, salaries, tips, and net earnings from self-employment.

The correct choice reflects this definition as wages paid for a job are a direct result of performing services for an employer, thus qualifying as earned income. This type of income is subject to income tax and payroll taxes, contributing to Social Security and Medicare.

In contrast, the other options represent forms of unearned income. Interest income from savings, rental income, and dividends are all generated without active participation in a trade or business. They do not require the individual to perform work or services, which is the critical distinguishing factor that identifies earned income. Understanding this classification is vital for tax reporting and planning, as earned income offers eligibility for various tax credits and benefits that may not be available for unearned income.