What constitutes earned income?

Earned income is defined as money that an individual receives in exchange for their labor or services. This includes wages, salaries, bonuses, tips, and other forms of compensation that are paid for work performed. When a person actively participates in work and receives payment for their efforts, that compensation is classified as earned income.

In this context, other choices do not fit the definition of earned income. Income from investments refers to passive income generated from financial assets, money received without any exchange of labor describes unearned income such as gifts or inheritances, and government assistance funds typically fall under forms of unearned income as they are not payments for labor performed. Therefore, the option focusing on earnings derived from actual work and efforts aligns perfectly with the definition of earned income.