What Are Three Types of Income? A Guide for West Palm Beach Property Owners

Earned income: wages, tips and self-employment

Earned income is money paid for work. For most residents in affordable units, it is the biggest piece of the picture: hourly wages, salary, overtime, commissions, tips and income from running their own small business or gig work.

Each way of proving it has trade-offs. A pay stub is current but shows only a short window. A written employer verification is direct and covers overtime and expected raises, though it can take a while to come back. A prior-year tax return shows the full year but may already be out of date by the time someone applies.

Tips and seasonal work deserve extra care. Plenty of residents in Palm Beach County work in hospitality, where winter months run busier than summer, so a single stub from January can overstate a full year. We look at enough pay history to annualize income fairly, so the figure in your file holds up if someone reviews it later.

• Recent consecutive pay stubs
• Employer verification of hours, pay rate and overtime
• Self-employment profit and loss statement plus the latest tax return
• Records of tips or commissions when they are a regular part of pay

Passive income: rentals and businesses the resident doesn't run

Passive income comes from something a person owns but does not actively work in. A resident who rents out a condo, collects royalties or holds a share in a business run by someone else has passive income.

It is easy to miss because applicants often do not think of it as income at all. A lease and a few months of deposits, or the rental section of a tax return, usually shows it clearly. Asking the question plainly on the application saves you from an awkward discovery at recertification.

Portfolio income: interest, dividends and assets

Portfolio income is what investments earn: savings account interest, stock dividends, gains from selling investments and similar returns. For most applicants these amounts are small, but they still belong in the file.

Bank and brokerage statements are the usual proof. They are easy to get and show balances along with earnings, which matters because many affordable housing programs look at income generated by assets, not only the paycheck. A recent statement for each account is better than a single summary, since it shows nothing was left out.

• Checking and savings statements
• Brokerage or retirement account statements
• Certificates of deposit and similar accounts

Where do Social Security, pensions and support payments fit?

Not every dollar fits neatly into the three textbook categories. Social Security, disability benefits, pensions, unemployment, child support and alimony are often grouped as unearned income. They still count when you measure a resident against the income limit.

The good news is that these are usually the easiest to document. A benefit award letter or a court order states the amount and how often it is paid, which is more reliable than piecing it together from deposits.

Why the type of income matters for Live Local compliance

Your property tax savings under the Live Local Act depend on affordable units being rented to residents whose income falls within the set limits. If an income source is missed or annualized the wrong way, a unit can look eligible on your rent roll when it is not, and that can put part of the exemption at risk.

Sorting income by type gives each resident file a simple checklist: what kind of income it is, which document proves it and how it was turned into a yearly figure. That same structure makes annual recertification faster, because you are updating known sources instead of starting over.

We do this work at our office or by phone and video, so your on-site team is not pulled away from residents. Our resident income verification, annual recertification and ongoing compliance support all follow the same file structure, so a reviewer can follow it from start to finish.