Recurring Income

May 4, 20222 min read
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A recurring income, which is oftentimes referred to as passive or residual income, is earnings that a person receives on an investment or asset that continuously pays profits without the investor having to put in additional work for it to be profitable.

For many people, a recurring income can be a rental or investment property that offers them monthly and annual income without them having to work for those profits. Another great example of recurring income can be from an investment or bond purchased bet left to mature and now distributes monthly payouts.

A person can have both a recurring income or residual income, or perhaps a linear income. This means that on top of the monthly earnings they receive from their full-time job, a recurring income can be an additional or secondary income for them.

What are examples of recurring income?

There are many types of recurring income structures that exist, and for some people, having more than one income is a regular occurrence, as this offers them better financial stability and security.

  • Profit-sharing as an angel investor
  • Profits obtained from rental properties or real estate
  • Dividend payouts from a private equity fund
  • Any dividends paid from owning stock in a public company
  • Earnings from rentals such as Airbnb
  • Any form of royalties
  • Profits from the sale of cryptocurrencies or Non Fungible Tokens (NFTs)

Although it’s possible for one to have a recurring income above traditional earnings, salaries, or wages – the Internal Revenue Services (IRS) treats recurring income as a different entity and has its own set of tax regulations and jurisdictions.