Legal Definitions - other income

Other income refers to earnings or gains that an individual or entity receives from sources outside of their primary employment, main business operations, or core investment activities. It encompasses a wide range of supplemental, incidental, or infrequent financial inflows that are still considered taxable or reportable income.

Here are some examples to illustrate:

• Example 1: Individual with a side hustle

  Sarah works full-time as a marketing manager. In her spare time, she occasionally designs custom invitations and greeting cards for friends and local clients, charging a small fee for her creative services. The money Sarah earns from these card design projects is considered other income because it is separate from her regular salary and benefits from her primary marketing job.

• Example 2: Business selling surplus assets

  A manufacturing company primarily earns revenue from selling its manufactured goods. One year, the company decides to sell an old, unused piece of machinery that is no longer needed for production. The profit generated from the sale of this machinery, after accounting for its depreciated value, would be classified as other income for the business, as it falls outside its core revenue stream from selling manufactured products.

• Example 3: Rental income from a secondary property

  David is a software engineer whose main income comes from his salary. He also owns a small vacation cabin that he occasionally rents out to tourists through a short-term rental platform. The money David collects from these rental bookings, after deducting expenses, is considered other income because it is distinct from his primary earnings as a software engineer and is not part of a full-time real estate business.