Passive income is usually an income received often, with little effort required to maintain it. It is tightly related to the very idea of “unearned income”. You can find three main groups of income: active earnings, passive income and portfolio income. Passive income isn’t going to include earnings from wages or lively business participation, nor should it include income from dividends, interest or even capital gains. With regard to tax purposes, you should note that cutbacks in passive earnings generally cannot canceled out active or account income. The best time for you to seek a passive income stream is if you have an immediate cash flow income being received by your household.