What Is Residual Income and How Is It Different from Passive Income? – Passive Income Article

How do you know if you’re looking for passive income vs residual income? And what’s the difference between the two?

If you look into different ways to earn passive income for any amount of time, you’ll probably notice that people will also often refer to it as “residual income”. 

Though the two are very closely related in definition, there is a difference.  We’ll show you what the difference is between passive income vs residual income.

In addition, we’ll show you how to find the secret to which one is best for you.

What is Passive Income vs Residual Income?

Many sources define passive income and residual income as the same thing. The two terms are closely related but there is a difference. Before we look at residual income, let’s first review the definition of passive income. 

Passive Income Definition

The actual definition of what is passive income comes straight from the IRS:

Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity

Translation: Basically it’s any income that is earned passively or without much involvement from the recipient of the income.   Wikipedia offers…