Which of the following is an example of earned income? (Select the best answer.)

Wages

Investments

Transfer payments

Gifts

"Wages" is an example of earned income.

Option: A

Explanation:

Salaries are generally associated with employee compensation which is fixed while wages have variable compensation. Wages are compounded by an hourly pay scale based on the number of hours worked.

The workers who receive hourly wages are generally paid in the week that comprises the hours worked. While other given option are not exact term used for earned income. The another term is salary, which is given at the month end and not dependent on daily basis, even some consolidations on emergency also exempted in salary but not generally in wages.

Option A

Wages is an example of earned income

Explanation:

Earned income is an income from work or self-employment. Income from expenses and government interests is not estimated earned income. It involves wages, gratuities, shares, tips, and net profits from self-employment. Earned income does not cover costs such as pensions, insurance interests, unemployment coverage, worker's coverage benefits, or social security benefits.

For tax proposals, earned income is an income you get for work you have completed. If you neglect to meet adequate tax throughout the year, you can be directed to IRS penalties.