What type of income is defined as income other than pay for work performed?

The correct answer identifies unearned income as income that is derived from sources other than employment or labor. This type of income typically includes things like interest, dividends, rental income, capital gains, and other returns that are not earned through direct work.

Understanding unearned income is crucial because it has different tax implications compared to earned income, which usually consists of wages, salaries, and bonuses received as compensation for services rendered. Consequently, unearned income is not dependent on hours worked or specific job performance, making it a distinct category in terms of tax obligations and financial reporting.

In this context, other options do not fit the definition of income that comes from non-work-related sources. Earned income, for example, specifically refers to all forms of compensation for work performed, while passive income typically implies earnings generated from investments or business ventures without active involvement in operations. Supplemental income generally describes additional income sources that complement primary earnings but still include some form of earned income.