MANAGEMENT

Detailed explanation-1: -Unearned income works differently than earned income. You don’t have to pay any payroll taxes, including Social Security and Medicare, on the various forms of unearned income. However, your unearned income (line 37 of your Form 1040) will count toward your adjusted gross income on your state and federal tax returns.

Detailed explanation-2: -Where is unearned income reported on your tax form? You’ll report unearned income on the IRS Form 1040. You may have to include Schedule 1 with your return and report it there as well. The total from Schedule 1 is then transferred to your Form 1040 tax return.

Detailed explanation-3: -Unearned income is income not earned from work. Examples include inheritance money, a financial prize, unemployment benefits, interest on a savings account, and stock dividends. 8.

Detailed explanation-4: -Recording Unearned Revenue It is treated as a liability because the revenue has still not been earned and represents products or services owed to a customer. As the prepaid service or product is gradually delivered over time, it is recognized as revenue on the income statement.