In this episode, we look beyond the buzzwords to explore the mechanics of passive income—money acquired with little to no labor to earn or maintain. We break down the most common vehicles for generating this revenue, from low-risk bank deposits and government bonds to volatile stock market indices and dividend reinvestment plans.

We also discuss the nuance of "improperty" and rental income, examining why being a landlord is only considered passive if you don't materially participate in the management. Listen in to learn why the IRS distinguishes between active, portfolio, and passive activities, and how these classifications can sometimes function as tax avoidance schemes for high-income groups. Finally, we cover global perspectives on taxing unearned wealth, comparing the U.S. system to regulations in Europe, China, and Russia.