Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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Which of the following is NOT considered earned income?

Wages
Salary
Dividends
Tips

The correct answer is: Dividends

Earned income refers to the money that an individual receives as a result of active participation in a trade or business. This typically includes wages, salaries, and tips, which are directly tied to work performed. Dividends, on the other hand, are payments made by a corporation to its shareholders, typically from profits, and are classified as unearned income because they do not result from active employment or services rendered. Therefore, dividends do not qualify as earned income since they are derived from investments rather than compensation for labor. This distinction is essential in understanding how different types of income are treated for tax purposes and in financial planning.