Passive income includes regular earnings from a source other than an employer or contractor. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends. There are many different ways to earn Passive Income and as with all investing the greater the risk the greater the potential reward.
In practice, you may do some or all of the work upfront, but passive income often involves some additional labor along the way, too. You may have to keep your product updated or your rental property well-maintained, in order to keep the passive dollars flowing.
What is Passive Income is NOT?
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Your full or part time job. Generally, passive income is not income that comes from something you’ve been materially involved in such as the wages you earn from a job.
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A second job. Getting a second job isn’t going to qualify as a passive income stream because you’ll still need to show up and do the work to get paid. Passive income is about creating a consistent stream of income without you having to do a lot of work to get it.
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Non-income producing assets. Investing can be a great way to generate passive income, but only if the assets you own pay dividends or interest. Stocks or Crypto's by themselves are not earning passive income, just the Capital Gain/Loss when you sell them. However with Crypto's you have the ability to Stake them where you earn passive income or interest on Staking the particular Crypto.