You really have to ask the website that is making that distinction. The best I can tell you is that for certain purposes, the IRS defines “compensation“ as income earned from providing a service. Compensation includes both wages and self-employment income, in other words, income that is subject to Social Security and Medicare or self-employment tax. Pensions, short and long-term capital gains, lottery prizes, and other types of income are not “compensation.“ For example, you can only contribute to an IRA if you have compensation from working. And if you retire before your full retirement age, the Social Security administration will reduce your benefit if you have more than a small amount of compensation from working.
