Video: Types of Income

In this lesson, Nick Palazzolo, CPA, dives into the distinct categories of income and losses that are critical for understanding their tax implications. He starts by distinguishing between active, passive, and portfolio income, illustrating how each type can impact a taxpayer's tax liability. Through clear examples, Nick clarifies the concepts of material participation, passive activity loss rules, and how certain exceptions can change the classification of an income source. He walks through practical scenarios, including a case study involving a teacher with various income streams, to show exactly how to categorize income for tax purposes. Nick’s interactive approach ensures a solid grasp of income types, preparing for more complex issues tackled in future lessons.