What I like about p2p investing on Lending Club is the website’s automated investing tool. You pick the criteria for loans in which you want to invest and the program does the rest. It will look for loans every day that meet those factors and automatically invest your money. It’s important because you’re collecting money on your loan investments every day so you want that money reinvested as soon as possible.
When a taxpayer records a loss on a passive activity, only passive activity profits can have their deductions offset instead of the income as a whole. It would be considered prudent for a person to ensure all the passive activities were classified that way so they can make the most of the tax deduction. These deductions are allocated for the next tax year and are applied in a reasonable manner that takes into account the next year's earnings or losses.

The PPACA Medicare tax is a dangerous tax IMHO. It is an entirely new kind of tax. It is small and in jeopardy of going away but I predict it won’t. If it goes away it won’t be for long and it will grow over time – like most taxes. 3.8% is a starting point. This one has the added political appeal of “taxing the rich” and “unearned income” that makes it more palatable to the electorate.
Self-publishing belongs firmly at the top of any passive income ideas list. Amazon, with Kindle Direct Publishing (electronic version) and CreateSpace (print on demand version) dominates the self-publishing world. It’s both good and bad. Good in that they’re quite generous with their commission rates (usually 70%). Bad in that they can change their policies at any time to be less favourable for authors and there is nowhere else for us to go. That’s not entirely true. There are a few other options, but none of them are as good as Amazon!

Vanguard: Vanguard has a minimum of $50,000 and a fee of 0.3%. Rebalancing is done automatically once every quarter and tax loss harvesting is done on a client-by-client basis. We included Vanguard because clients who invest between $50,000-$500,000 have access to a team of financial advisors. Those with accounts over $500,000 will have a dedicated advisor.
My returns are based on full cash purchase of the properties, as it is hard to compare the attractiveness of properties at different price ranges when only calculating down payment or properties that need very little rehab/updates. I did think about the scores assigned to each factor, but I believe tax deductions are a SIGNIFICANT factor when comparing passive income steams.
Passive income bluntly is income that would continue to generate if you died. Morbid. How about this? Passive income is income that would continue to generate if you decided to do nothing and sunbathe on some beach. That sounds better. Passive income includes rental income, royalties and income from businesses or investment partnerships / multi-member LLCs where you do not materially participate.
Generally, to determine if activities form an appropriate economic unit, you must consider all the relevant facts and circumstances. You can use any reasonable method of applying the relevant facts and circumstances in grouping activities. The following factors have the greatest weight in determining whether activities form an appropriate economic unit. All of the factors don’t have to apply to treat more than one activity as a single activity. The factors that you should consider are:
The reality of the situation is that this client doesn’t use a property management company on the rentals. I felt it was stretch to say she was a real estate professional, because she is a physician.  However, before she got her job with the clinic, she did some side work at a hospital for a few months, but never met the limits of material or active participation.  
Passive Income is nothing but some extra income you generate apart from your primary income. In short you create your secondary income source (without much effort). Why we need, well just to make little more money and to get more security from primary source in case of emergency. No jobs are safe nowadays, so its better to no relay on one source. So, here we are providing you 10 passive income source by which you can generate more extra income.
But, if you’re serious about making money online and generating some passive income for yourself, keep reading for some ideas on how to do that. It is possible, but it does take some serious effort and knowledge. The good news is that starting is the most important thing and you can learn all you need to as you stumble along. I started from ground zero 1.5 years ago and now I earn around $1000/month in passive income.
Anthony, nice setup! To your question about the rental mortgages, you haven’t said what interest rate you are paying. As a start, if you are paying more than the risk free rate (Treasury bills) which you probably are, then a true apples to apples comparison would be yes, pay off the mortgage. But, if you are comfortable taking more risk, you have other options to invest in which you *hope* will yield you more over the coming years. You also didn’t say whether the rentals generate net income and if so, how much? What is the implied rate of return on the equity you have invested in them? If you pay the mortgages off, you’ll have even more equity tied up, will the extra net income make that worthwhile? Maybe you should use the money to buy more rentals instead, if purchase opportunities still exist in your town. … this is less of an answer than a framework to analyze the decision, hope it is helpful.
In addition, any prior year unallowed passive activity credits from a former passive activity offset the allocable part of your current year tax liability. The allocable part of your current year tax liability is that part of this year's tax liability that‘s allocable to the current year net income from the former passive activity. You figure this after you reduce your net income from the activity by any prior year unallowed loss from that activity (but not below zero).
​Network marketing, or multi-level marketing, seems to be on the rise. Companies such as Young Living Oils, Avon, Pampered Chef, and AdvoCare are all multi-level marketing companies. You can earn passive income through network marketing by building a team underneath you (often referred to as a down line.) Once you have a large team you can earn commissions off of their sales without having to do much.
Are you totally convinced that I have completely diverged from talking about active vs. passive income? I don’t blame you. I would have forgotten about those by now too. But let’s bring them back now. Ok, how do those relate to lifestyle design? Well, I’m assuming we have established that your personal lifestyle design does not involve working, correct? Do you remember which kind of income requires you to work for it? Active income. So then for complete lifestyle design, do you want to have to rely on any active income? No. You only want passive income because passive income doesn’t require much, if any, work on your part. Then you are free to travel or play or watch TV all you want.
We pitched to an angel investor group. They were very excited about the idea but wanted to know who amongst us (doctor, accountant, salesman) was doing the coding. When they heard we were outsourcing it, the wind went out of their sails immediately. They did want to meet with us again once we brought a coder on board but that person proved elusive to find. Coders in our area are looking for the steady paycheck, not willing to gamble on a startup.
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The amount of tax you will pay on passive income will largely depend on the amount of income you generated and the ways in which it was obtained. For example, income from interest or short-term capital gains will be taxed according to standard income tax rates, while qualified dividends will be taxed according to long-term capital gains rates if you made more than $38,600 in ordinary income.

This can be a little easier said than done, but if you have a large social media following, you can definitely earn money promoting a product or advertising for a company. You can even combine this with different marketing campaigns if you are an influencer and have your own blog (advertisement + affiliate income). This is how many bloggers make money! Again, it is not 100% passive but once set up correctly and then scaled, can be surprisingly lucrative.
First: I understand why you would say that such investments are restricted to only accredited investors, because generally, that’s true. There are means, under federal securities regulations and Blue Sky laws in each state, to sell interests to non-accredited investors – but usually those means are so heavily regulated and involve disclosures so similar to cumbersome registration requirements that it is not worth it for the seller to offer to non-accredited investors.
I also noticed that in your passive income chart at the bottom that you don’t include your internet income other than sales from your book. Is there a reason for that? Do you not consider is passive because you are actively blogging all the time to create it? Or do you just not want readers to know how much money you generate from blogging activities?

Of course, a book isn’t the only way to get your thoughts to the world nowadays. You could also start a blog, website or YouTube channel to earn some passive income. Besides the creation of your website, videos and content, blurting out your ideas and advice online seems pretty passive. However, it will take a lot of work on your part and time to gain readers, followers and then paid advertisers. You will need to make your content marketable and appealing. That way you continue to gain followers, advertisers and money.
If you disposed of property that you had converted to inventory from its use in another activity (for example, you sold condominium units you previously held for use in a rental activity), a special rule may apply. Under this rule, you disregard the property's use as inventory and treat it as if it were still used in that other activity at the time of disposition. This rule applies only if you meet all of the following conditions.
I’m with you Dennis. My whole goal, for years, was to get myself into a position to be able to go back to flight instructing but not be reliant on the income (because it isn’t good). I didn’t know how I would do it, but I ended up starting my own business that I work whenever I want, so now I can pop out to the airport for a couple flights a week and have fun with it, not care about the income (or lack there of) and enjoy it. That is a “job” I will probably always work, but it’s because it’s fun and not required for the income.

Blogging is still going to take work starting out. That path to $5,000 a month didn’t happen overnight but just like real estate development, it build up an asset that now creates constant cash flow whether I work or not. I get over 30,000 visitors a month from Google search rankings, rankings that will continue to send traffic even if I take a little time off.
The ideas that follow are not truly “passive income,” in that they require a significant amount of effort. However, I’m defining the term loosely and considering anything where one hour of work does not equal one hour of pay as passive income. The idea is that you put the work in up-front and then reap the benefits down the road. Read on for my top 10 passive income ideas!
Your car: Transportation can be a hot commodity on campus, and many students will pay for it. If the idea of handing over your keys makes you squeamish, look for ways to get paid as a chauffeur. A girl in my college dorm made extra cash by charging $5 to tag along when she went to the grocery store. And when I drove out of town for long weekends, I often would cover my gas costs and then some by offering rides.
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The IRS issued a notice of deficiency for tax years 2008 through 2010. They disallowed the passive activity loss and tacked on a Section 6662(a) accuracy-related penalty. Hardy appealed for redetermination in a timely manner. He challenged the IRS's determination that he could not claim passive activity loss deductions against the income from MBJ and the accuracy-related penalties.

Say you’re always super busy, but you still need some ways to make passive income. You’re in luck! Starting with a fun option, you can buy a gumball machine! Once you buy one, set it up somewhere and wait for the coins to roll in. The same goes for a vending machine. You can up your earnings with a vending machine, too, by simply stocking whatever’s in high demand at its location. The key to earning a solid amount of passive income here is to choose the right location.
What the best investors do is create a list of simple rules to guide them so that when things get emotional, they remain on-target long term. It’s important to have your focus on the bigger goal. We can’t control all the events in our lives, but we can control what those events mean to us. The purpose of this Unshakeable by Tony Robbins’ summary is to show you that it’s possible to create passive income through financial investments – like index stocks. I hope you enjoy the video review and be sure to drop a like!
Whether you take a “distribution” (aka free-cash-flow) in the form of a dividend, interest payment, capital gain, maturing ladder of a CD, etc, you are still taking the same amount of cash out of your portfolio. Don’t fall for the trap of sub optimizing your overall portfolio’s performance because your chasing some unimportant trait called “income”.
In this economy, it seems like more and more of us are looking for a way to earn passive income. Whether we need to pay off credit card debt or just need some extra cash, passive income could come in handy. But what is passive income exactly? Depending on who you ask, it may not be as “passive” as you think. Let’s take a look at what it is and the top ways to make it.
I love my passive income. When you achieve enough of it the decision to start slowing down is easy. My passive income is plain vanilla. It is just coming from stocks and muni bonds. Some complain about the tax drag of income in a taxable account but I look at it as covering my living expenses in retirement. Interestingly I have never invested in “income” producing funds etc. If you save enough your portfolio will pay you more than enough without doing anything exotic.
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Qualified dividends are taxed the same as long-term capital gains. In 2018, you can earn up to $38,600 in ordinary income without being taxed on long-term capital gains or qualified dividends. If you earn between $38,600 and $425,800 in ordinary income, your long-term capital gains tax rate is 15 percent, which would also apply to qualified dividends. If you make more than $425,800, the rate is 20 percent.
If you buy T-bills worth of N500,000 at 10 per cent discount rate, CBN will debit your account with N450,000, leaving a balance of N50,000. This means that your interest of N50,000 has been paid to you upfront. When your investment matures, you are still paid your N500,000.This shows that you were actually paid N550,000 for your investment of N500,000. (Source)
Developing your own passive income stream is an excellent idea if you believe in financial independence. Not only does it give you freedom of time, but it also reduces your stress, anxiety, and fear of the future. In the book Unshakeable by Tony Robbins, he illustrates how investing a couple of hundred dollars a month is all it takes to become a millionaire. This lifestyle empowers you to do the things you love rather than what pays the bills. See the list below.
We know from years of feedback from readers, amazon sellers, and family and friends what most people want in a passive income. The Independently published top 10 passive incomes is exactly that – it’s a simple passive income that hits all the right notes. Whether you have any experience or not, this book will help guide you on how to create passive income with little to no start up costs. A proven list of ways to create passive income starting with less than 500. When it comes to finding a optimal passive income, the Independently published top 10 passive incomes is definitely your first choice.
In June, he put ads on his site with Google Adsense, and within the first hour, earned $1.08 with three clicks. He earned $5 the first day, $7 the second, and then eventually began pulling in $15-$30 a day. In October, he created an ebook exam study guide priced at $19.99. By month’s end, he earned $7,906.55 — more than he had ever previously earned in a month.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
I actually spent a year and a half working as an affiliate marketer (mostly selling drumming related products – lessons, kits ect). 5 years on and one of my one page sites (which I’ve not touched) still nets me about $150 a month. I won’t be retiring off that but only really now appreciate the reverse pyramid approach to entrepreneurship (working for nothing initially but later being paid without effort!)
Peer-to-peer lending means loaning money to other people. Specifically, you lend money to people who don’t qualify for traditional financing. Companies like Lending Club and Prosper offer returns in the range of 4-10%, which are a lot higher than a typical saving account. You will be able to select the right investment for you, based on your risk assessment strategy.
Get Paid To Shop: The Shopkick app is a free mobile app that pays you walk into stores, link your credit card, scan barcodes in stores, shop online, refer friends and more. Convert points into gift cards and other cash prizes. This app makes shopping fun, and you even get a 250-point bonus when you sign-up as a new member. The best part? It's 100% FREE to join.
The age old argument of total return versus income has been, incorrectly imo, categorized as an either or proposition. We are going to do both. Right now I have a lot cash in an on line money market. I also have investments in 2 passive Index funds in a taxable account. We then have substantial 401ks/IRA’s which we won’t touch for at least 10 years. My wife will continue to max out her sep and we will continue to invest in the index funds although with a smaller amount. We have already factored that in. I looked at how to cut into the monthly deficit. Here is what I observed.
When I did her recent tax return she had $45,000 in passive losses from the rentals and $35,000 in income from her S-Corporation. I called her and found out how many hours she had only worked for three months in her S-Corp, which was less than 500/750 hours per year.  I changed the nature of the income from the S-Corporation to passive, thereby eating up the passive losses from the rental. 
Kate, a single taxpayer, has $70,000 in wages, $15,000 income from a limited partnership, a $26,000 loss from rental real estate activities in which she actively participated, and isn’t subject to the modified adjusted gross income phaseout rule. She can use $15,000 of her $26,000 loss to offset her $15,000 passive income from the partnership. She actively participated in her rental real estate activities, so she can use the remaining $11,000 rental real estate loss to offset $11,000 of her nonpassive income (wages).
Another way to obtain real estate exposure in your portfolio is through the purchase of Real Estate Investment Trusts or REITs.  A REIT is a company that owns or finances income- producing real estate.  REITs are usually structured as a mutual fund so you can purchase REITs on major stock exchanges and offer several benefits such as real estate exposure, diversification, low correlation with financial assets, and potentially higher income than regular equities.

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Finally, I imagine the biggest debate with my ranking is Creating Your Own Product as the #1 passive income source. If most people have never created their own product, then it’s easy to give it a thumbs down. There won’t be much complaint about Private Equity Investing being in last place because most people are not accredited investors. But given I believe that plenty of people can create their own product if they try, pushback is inevitable because a lot of people simply don’t try!
I hope you remember me for my good qualities and not my bad ones because I have plenty of both. As far as the tax bill, I’ll have a podcast coming up on it but probably won’t do a post until it’s law and probably not until well into the new year. I’m sure I’ll offend all of my listeners with the podcast and the post, both those who think the tax system should be more progressive and those who think it should be less progressive.
2. Repairs: Slightly more ambiguous than their interest deduction counterpart, repairs can only be deducted in the event that they are ordinary, necessary, and reasonable in amount. That said, repairs can only be deducted in the year in which they are made. Common repairs that can be deducted from your taxes come April are fixing leaks, repainting, plastering, replacing broken windows and fixing floors.
This article is great, defining the differences and emphasizing the advantages of passive income. I believe it might be helpful to list some of the tax advantages of passive income vs active income as well. These include and are not limited to: cash-flow, being able to claim depreciation, deductable loan interest, tax free refinancing and deferred taxes on sale of property via 1031 exchanges. It’s the difference between 50% taxed income and potential tax free income.

The government has announced its intention to introduce legislation that will reduce the SBD limit by $5 for every $1 of investment income above a $50,000 threshold, beginning in 2019. Once passive investment income exceeds $150,000, the SBD limit will be reduced to zero and the CCPC will pay tax at the general corporate tax rate of 26.5% as opposed to the 13.5% SBD Rate (for Ontario CCPCs).
I own several rental properties in the mid west and I live in CA. I have never even seen them in person. With good property management in place (not easy to find but possible) it is definitely possible to own cash flowing properties across the country. Not for everyone and not without it’s drawbacks, but it seems to be working for me so far. I’m happy to answer any questions about my experience with this type of investing.
Passive income broadly refers to money you don't earn from actively engaging in a trade or business. By its broadest definition, passive income would include nearly all investment income, including interest, dividends, and capital gains. What most people are referring to when they talk about passive income is income that comes from what the IRS calls a passive activity.
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Blogging is still going to take work starting out. That path to $5,000 a month didn’t happen overnight but just like real estate development, it build up an asset that now creates constant cash flow whether I work or not. I get over 30,000 visitors a month from Google search rankings, rankings that will continue to send traffic even if I take a little time off.

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One of the biggest advantages of passive income is that it works when you aren’t working. The more passive the income, the less work that is involved at all. This appeals to my inherent laziness. But consider a high-powered surgeon. Sure, her hourly rate, while she is operating, is astronomical.  But as soon as she walks out of the OR, that income stream stops until she scrubs in again. Vacation? Not only is there no income stream, but there is likely a negative one due to overhead. When a passive earner is on vacation, that income stream, small as it may be in comparison to the surgeon, keeps right on working. Interest works both ways and as my kids know, interest should be something you get not something you pay. As J. Reuben Clark said nearly a century ago:

“There is no such thing as 100% passive income,” says Flynn. “Even with real estate you still have to manage your properties, or even with the stock market, which is potentially passive income, you still have to manage your portfolio. With online business, there is no such thing as 100% passive income — and this is coming from a guy with a blog called SmartPassiveIncome.com. The definition of passive income is ‘building these businesses of automation,’ but in order to keep them automated and keep that trust going with your audience on top of that, you do have to keep it up every once in a while — so a lot of time upfront and a little time after. But there is alway time involved.”

If the property in the syndication was held for at least a year, the gain will be treated as long term capital gain subject to 15%/20% capital gains rate.  Any depreciation taken on the property is subject to recapture and taxed at 25%.  The issuance of a K-1 usually results in a taxpayer needing to extend their individual tax return as most K-1s are not sent out until after the regular due date April 15.


If any amount of your pro rata share of an S corporation's loss for the tax year is disallowed under the basis limitation, a ratable portion of your pro rata share of each item of deduction or loss of the S corporation is disallowed for the tax year. For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing:


The K-1 stated that the income was from a trade or business and included self-employment tax. Dr. Hardy's ownership interest in MBJ was not grouped with his medical practice activity, and the grouping regulations were not considered. In 2008, their CPA determined that the income from MBJ was passive and started to report it accordingly. He determined this because he learned that Dr. Hardy was not involved in any management of MBJ and was not liable for the debts of the company. He did not amend the 2006 and 2007 returns because he believed the difference was immaterial. In 2008 through 2010 the Hardy’s reported the MBJ income as passive and claimed an allowed loss.
Three full-time nonowner employees whose services were directly related to the business. A nonowner employee is an employee who doesn’t own more than 5% in value of the outstanding stock of the corporation at any time during the tax year. (The rules for constructive ownership of stock in section 318 of the Internal Revenue Code apply. However, in applying these rules, an owner of 5% or more, rather than 50% or more, of the value of a corporation's stock is considered to own a proportionate share of any stock owned by the corporation.)
Mike, I don’t consider the income from FS to be passive, as I’m spending time commenting to you right now. But since 75% of my traffic comes from search, the most traffic I would probably lose is 25% for probably a year. And then my search word rankings would probably slowly fade given frequency of posting new content is one of the search algo variables.
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I agree mostly with the real estate advice. I’m looking for ways to take advantage of the condo I own to get up the rent from ~$0.90/ft to the $1.2-1.5/ft that seems more like the range in the same area. I’d have to put in a bit of capital (probably 10k on the low end for just the basics up to 40k if I wanted to remodel the kitchen and 2 bathrooms up to par with the area), so the return is likely there if those upgrades warrant $1.30/ft (given the unit is larger than most 2br/2ba in the area).
Similar to making a website or blog, but more passive, is creating an online course. If you have a specific skill you know you can teach and that others want to learn, you can easily create an online course. Sites like Udemy can help you do this. It requires some work to make it, but after that, users simply need to sign up for the course and pay a fee.
Maybe such a business is owning a McDonald’s franchise or something. If one has the capital (Feasibility Score 2), then the returns might be good (Return Score 6). But the Risk Score is probably under a 5, b/c how many times have we seen franchise chains come and go? Like, what happened to Quiznos and Jamba Juice? A McDonald’s franchise was $500,000… probably much more now?
Starting a blog is one of the most popular side hustles to earn online income. This is because whether you have 10 people or 10 million reading your content, the amount of your effort to write an article is the same. Websites have low start-up costs and you can literally buy your domain, launch your site and have a few pages created in less than an hour. You won’t start making money right away, but you will be building towards that first $1 of income.
Personal Capital – The best free finance tool I’ve ever used. It keeps me on track by monitoring my net worth, cash flow, and expenses. My favorite feature is their retirement planning calculator that runs a Monte Carlo simulation based on your asset allocation and spending. Sign up for free and get started on your path to financial freedom. Don’t get behind by not using the best free financial tool on the market right now. You have nothing to lose and everything to gain. It only takes a minute and you’ll love it. Trust me.

But, you don't need to go further than that. You can simply write it and publish it and collect the income. That's all. Send out a couple emails to your list (if you have one) or post it on social media, and there you have it. Passive income. Now, the amount of income you receive depends on the quality of the book you've written. How well did you craft the message? How targeted was the information to your audience? It counts.
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