If you know anything well, a place, how to fix something, how to make something, how to do something, you can write a guide for it. You can sell your guide as an e-book, offer it as a download for a fee on your site or reach out to bloggers with similar content and ask if they will offer it as a paid download on their website (for a price of course).


Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world. Follow @DanCaplinger
Secondly – and this is just quibbling – I’d change that risk score. The risk of private equity is incredibly high and should be considerably riskier than bonds! You are providing a typically very large amount of capital to one business that you agree to have no control over, and the success or failure of that business over a locked, predefined term determines your return. And in the few deals I’ve negotiated for clients, my experience has been that there are often management fees, performance fees, etc. that may cut into your potential gains, anyway. You’re putting a lot of eggs in one basket, and promising an omelet or two to the management no matter what. You really need to be confident that you found the next Uber before you take this giant risk!
The key here is that income from equipment leasing or rental real estate is generally treated as passive income, with only limited exceptions. Other businesses, including sole proprietorships, partnerships, limited liability companies, and S corporations, produce passive income if the individual taxpayer in question doesn't meet the standard for material participation.

The business isn’t an excluded business. Generally, an excluded business means equipment leasing as defined, earlier, under Exception for equipment leasing by a closely held corporation , and any business involving the use, exploitation, sale, lease, or other disposition of master sound recordings, motion picture films, video tapes, or tangible or intangible assets associated with literary, artistic, musical, or similar properties.


Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.
I wouldn't think of a high yield savings account as a source of passive income but your savings should be getting something (less like Seinfeld syndication residuals and more like a commercial jingle residuals!). It won't make you rich but it's nice if your baseline, risk-free rate of return on cash is 1% or more. The best high yield savings accounts (or money market accounts) offer higher interest rate and there is absolutely no risk. CIT Bank currently leads the pack with the highest interest rate.
According to Congressional Budget Office figures from 2011, the top 1 percent of taxpayers pay an average of 29.5 percent, those in the percentiles from 81 percent to 99 percent pay 22.8 percent, those from 21 percent through 80 percent pay 15.1 percent, and the bottom 20 percent pay 4.7 percent. Those numbers, of course, don’t include the 49.5 percent of Americans who pay no federal income tax at all.

Despite some ups and downs in recent years, real estate continues to be a preferred choice for investors who want to generate long-term returns. Investing in a rental property, for example, is one way to produce a regular source of income. At the outset, an investor may be required to put up a 20% down payment to buy the property, but that may not be a barrier for someone who's already saving regularly. Once reliable tenants are installed, there's very little left to do except wait for the rent checks to begin rolling in.
Ask yourself how many hours a week do you spend sitting in silence, coming up with an idea and working on your idea? We’re so busy with our jobs that our childhood creativity sadly vanishes at some point in our lives. There are food bloggers who clear over $15,000 a month. There are lifestyle bloggers who make over $10,000 a month while living in Thailand. And there are even personal finance bloggers who’ve sold their sites for multi-millions.
stREITwise offers a hybrid investment between traditional REIT fund investing and the new crowdfunding. The fund is like a real estate investment trust in that it holds a collection of properties but more like crowdfunding in its management. The fund has paid a 10% annualized return since inception and is a great way to diversify your real estate exposure.
Who doesn’t like some down and dirty affiliate fees?!  Especially if you realize it can be even easier to make money this way than with an ebook.  After all, you simply need to concentrate on pumping out some content for your own site and getting the traffic in, often via Google or social media.  Unsurprisingly, most people can enjoy their first affiliate sale within 30 days of starting a blog.  Continue reading >

My goal is to generate enough passive income (ultimately; for the next few years, I’m definitely working for it both with a day job and property managing my investments) to do what I want, when I want, how I want, and where I want. We all define that “what, when, how, and where” differently, and to each of us, financial freedom means something different.


The practice of day trading refers to buying and selling mostly cheaper varieties of stock. These traders don’t hold onto stock like traditional investors do. Instead, they earn profits by day trading. Now, this type of trading can be very risky because the market is volatile. Also, the cheapest types of stocks are highly likely to be negatively impacted by scams and fraud. Regardless, some traders do manage to master the art of day trading by researching the companies from which the stocks originate. Studying price history charts and understanding trends in a particular sector can help traders become proficient in their craft. Thanks to new tech, anyone can become a trader from the comfort of their personal computer or smartphone.
Different types of passive income have different tax rules. For example, interest income is considered ordinary income. Financial institutions like banks offer various interest-bearing deposit accounts like savings accounts, money market accounts and certificates of deposit. Interest income credited to an account that is available for withdrawal without penalty is included in your normal taxable income, so the tax rate on interest is your normal income tax rate.

Even if you’re personally liable for the repayment of a borrowed amount or you secure a borrowed amount with property other than property used in the activity, you aren’t considered at risk if you borrowed the money from a person having an interest in the activity or from someone related to a person (other than you) having an interest in the activity. This doesn’t apply to:


4. Home Office: Passive income investors, not unlike most professionals that work from home, are allowed to deduct their home office; provided it meets the minimal criteria. What’s more, this deduction helps both renters and homeowners. You can deduct your home office whether you on the home it is in or are simply renting it. However, like every other deduction on this list, the home office must meet certain requirements to qualify for a deduction.
Most credit card companies offer sign-up bonuses to entice you to open a credit account with them. As long as you don’t spend money just to hit the minimum balance and always pay your balance on time, this can have a minimal impact on your credit score while earning you hundreds – or even thousands – of dollars a year. Some of the best travel credit cards offer 100,000 points to new accounts when you meet reasonable spending requirements.
Passive income investments can make an investor's life easier in many ways, particularly when a hands-off approach is preferred. The four options outlined here represent differing levels of diversification and risk. As with any investment, it's important to weigh the anticipated returns associated with a passive income opportunity against the potential for loss.
If you qualify as a real estate professional, rental real estate activities in which you materially participated aren’t passive activities. For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity.
Real estate crowdfunding presents a middle-ground solution. Investors have their choice of equity or debt investments in both commercial and residential properties. Unlike a REIT, the investor gets the tax advantages of direct ownership, including the depreciation deduction without any of the added responsibilities that go along with owning a property.
An Individual Pension Plan (IPP) is a defined benefit pension plan created for one person, rather than a large group of employees. Since the corporation contributes to the IPP and the income earned in the IPP does not belong to the corporation, that income is not AAII. The tax benefits of an IPP need to be offset against the administrative costs, including actuarial costs, to set up and maintain the plan.
Indeed, the tax deferral was seen by the government as so valuable that it took legislative steps in the 2018 federal budget to substantially reduce it in some circumstances. Beginning in 2019, the SBD limit will be reduced based on the amount of “adjusted aggregate investment income” (AAII) the CCPC earned in the prior year. AAII is effectively passive investment income — think interest, dividends and capital gains — with a few adjustments.
The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors.
Passive income is earnings derived from a rental property, limited partnership or other enterprise in which a person is not actively involved. As with active income, passive income is usually taxable. However, it is often treated differently by the Internal Revenue Service (IRS). Portfolio income is considered passive income by some analysts, so dividends and interest would therefore be considered passive.
Having an extra house, condo or apartment is potentially quite lucrative, especially if  what the tenant pays covers your mortgage, taxes, insurance, etc. Someone else is basically building your pool of wealth because in 10 or 20 years, you’ll have this $100,000+ asset that is paid off. You can sell it for a large chunk of cash, or keep renting it out and have a nice, steady stream of income. The major problem is that managing this isn’t exactly passive, unless you hire a rental management company who generally take one month’s rent out of the year in exchange for doing this.

The hope is that under the new federal budget rules, businesses can pay taxes at a rate that better reflects their size and and complexity. By giving business owners at all levels an incentive to focus on active income and generating sales, these new rules could help with overall growth for Canadian businesses. The new rules are simpler to understand and calculate, which is good news for both you and your business clients.
For those willing to take on the task of managing a property, real estate can be a powerful semi-passive income stream due to the combination of rental and principal value appreciation. But to generate passive income from real estate, you either have to rent out a room in your house, rent out your entire house and rent elsewhere (seems counterproductive), or buy a rental property. It’s important to realize that owning your primary residence means you are neutral the real estate market. Renting means you are short the real estate market, and only after buying two or more properties are you actually long real estate.

So that is where it gets a little weird too- tax classifications, which might be slightly different than the term defining how much work you do. Owning a business will always be taxed as active income. Rental properties will always be taxed as passive income. The reason being (all theoretical to an extent) is that, in theory, if the business stops selling or performing, income is lost. In theory, rental properties can continue to make money if you do no work on them. If I had a rockstar property manager who constantly handled everything about the property, I could technically do zero work and still receive income. In theory, even if the PM stopped working the property, if a tenant stayed there forever and kept sending money, you get income with no work. Not all that realistic for you to never be involved, and most certainly to succeed without a PM, but taxes assume it’s possible. Work has to continue to happen with a business for it to make income, therefore it’s active.
There is a way to find undervalued dividend growth stocks. Of course, any additional passive income I receive I will invest into the best dividend growth companies to ensure I’m participating in compound interest. In addition, if you love investing in impact sectors. I like Wunder Capital to invest in solar projects across the U.S. Check out our review on the Wunder Capital platform.
Being able to generate passive income largely depends on your audience, and if they detect that you care more about making money than serving them, you won’t succeed. “Whenever I’ve seen people do something just for the money, they’ve failed because their intentions aren’t driving them in the right direction. It should always be about helping people and about the passion of making others feel better. The byproduct of doing that is generating money,” says Flynn.
The main idea behind the new passive income rules is to create a system that taxes businesses proportionally to their overall size and income amount. If you’re mostly dealing with smaller startups and family-run businesses, these new passive income rules will probably have little effect, and may even allow companies more freedom to grow their business.

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.
Indeed, the tax deferral was seen by the government as so valuable that it took legislative steps in the 2018 federal budget to substantially reduce it in some circumstances. Beginning in 2019, the SBD limit will be reduced based on the amount of “adjusted aggregate investment income” (AAII) the CCPC earned in the prior year. AAII is effectively passive investment income — think interest, dividends and capital gains — with a few adjustments.
Who doesn’t like some down and dirty affiliate fees?!  Especially if you realize it can be even easier to make money this way than with an ebook.  After all, you simply need to concentrate on pumping out some content for your own site and getting the traffic in, often via Google or social media.  Unsurprisingly, most people can enjoy their first affiliate sale within 30 days of starting a blog.  Continue reading >
The equipment leasing exclusion also isn’t available for leasing activities related to other at-risk activities, such as motion picture films and video tapes, farming, oil and gas properties, and geothermal deposits. For example, if a closely held corporation leases a video tape, it can’t exclude this leasing activity from the at-risk rules under the equipment leasing exclusion.

Dividend investing is right up there for sure. You don’t have to charge $48. You can charge <$10 to boost sales. The internet has enabled so many creatives to publish their works at a low cost. People will surprise themselves if they try to create like when they were in school. The other reason why I have Creating Products edging out dividends is because of the much higher POTENTIAL to make a lot more money. For example, $20,000 a year in book sales requires $570,000 in dividend investments to replicate the same amount. Plus, there is capital risk. With book sales, there is a correlation with EFFORT, and you are not beholden to the whims of the markets.
“Where a lot of people mess up is they try to build a business or create a product that serves everybody, and by trying to serve everybody, you serve nobody. You have to specialize and niche down and find a market with a pain point that you, based on your experience, based on your education and based on your passion, can help,” he says. Your earnings will directly reflect how well you serve that particular audience, and the more your message resonates with them, the more opportunities you’ll have to sell to them.
Take for example a situation where a CCPC earns rental income from its real estate properties which for this example qualifies as passive investment income and provides, at the same time, property management services that are characterized as active income. Under the current regime, a portion of the high corporate income tax paid by the corporation of 50% on its rental operations is accumulated in its RDTOH and will be refunded by the government only upon the payment of a dividend by the corporation to its individual shareholder. Given that an Eligible Dividend paid out of the property management services are taxed at a lower rate than would be a dividend paid out of the rental income, being a dividend that is not an Eligible Dividend, the company would decide to pay the Eligible Dividend and recover the RDTOH generated from its passive income. The profits generated from the rental operations could be paid to the shareholder the following year or two for example as a dividend that is not an Eligible Dividend, thus providing for a deferral of that additional 4% personal income tax.
You will get a good gauge of the market when you release your app. It’s analogous to going fishing. You have to cast your app out to see if anything bites. Once you get a few bites, you can start adding a few new features to improve your app passive income. A couple bells and whistles. Finally, start paying attention to feedback. The best way to set yourself up for success with both analytics and feedback are to integrate them both before releasing your app.

The IRS uses the latest encryption technology to ensure your electronic payments are safe and secure. You can make electronic payments online, by phone, and from a mobile device using the IRS2Go app. Paying electronically is quick, easy, and faster than mailing in a check or money order. Go to IRS.gov/Payments to make a payment using any of the following options.


Keep in mind, many questions can be answered on IRS.gov without visiting an IRS Tax Assistance Center (TAC). Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

If all or any part of your loss from an activity is disallowed under Allocation of disallowed passive activity loss among activities for the tax year, a ratable portion of each of your passive activity deductions (defined later), other than an excluded deduction (defined below) from such activity is disallowed. The ratable portion of a passive activity deduction is the amount of the disallowed portion of the loss from the activity for the tax year multiplied by the fraction obtained by dividing:


If the total is more than 500, don’t complete Worksheet A or B. None of the activities are passive activities because you satisfy test 4 for material participation. (See Material participation tests , earlier.) Report all the income and losses from these activities on the forms and schedules you normally use. Don’t include the income and losses on Form 8582.

If you can save a lot early on in life, you can build up sources of unearned income, and this income will be exempt from payroll taxes. This is good news for investors and for retirees. Any pre-tax salary deferral contribution made to a retirement account, pension plan, or other pre-tax contribution will lower the amount of federal and state income tax liabilities, however, they do not lower your payroll/FICA tax - the FICA tax has already been taken out of gross wages. 
Our favorite platform for this is RealtyMogul because you get the flexibility to invest as little as $1,000, but can also participate in REITs and private placements – typically not offered to the public. Investors can fund real estate loans to gain passive income or buy an equity share in a property for potential appreciation. Their platform is open to both accredited and non-accredited investors.
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