Jim Smith and Sharon Jones own JS Toys as 60-40 partners. Jim received $1,000 in interest income from the business because he lent the business money. Jim owns 60% of the business. Therefore, Jim can exclude $600 from his net investment income since that is his allocable share of non-passive income. The remaining $400 would be subjected to the Net Investment Income Tax calculation. Yes, we accountants love a stupidly convoluted tax code- keeps you confused or bored, and keeps us employed.
YouTube is one of the most rapidly growing trends in 2018 and getting subscribers on YouTube is all the rage. You can create videos on any theme like opinions, comedy, love, tutorials, music etc. and put them on YouTube. Overlaying your video with Google AdSense will make you earn every time the ad is clicked. If you create YouTube videos for an education matter, you can repurpose these videos into an online course.
Wow! What an awesome list! My favorite is the stock photography because I love photography. I have had some success there, particularly with one photo I make some decent income from. I think the key with stock photography is finding a shot that is high demand. Then, find a new unique way to frame that shot. This is the reason my St. Louis Arch photo is a top 10 on both ShutterStock and iStockPhoto. Thanks for the awesome ideas above!
Good suggestions. I have many of these. One word about the “app” idea. I had a great idea related to personal taxes that I tried to get off the ground with my accountant as a partner. I would say it’s difficult to do this unless you have a coder on your team. Hiring someone is not really viable financially unless the app is simple. When we finally got the quote for a coder to write what we wanted (and after doing lots of mock ups ourselves and getting a demo for investors) the estimate was about 750k just to really get started.
Passive activity income often gets very different tax treatment from the ordinary income that people have. In particular, passive losses are typically deductible only against passive income, and you're not able to claim excess passive losses immediately, instead having to carry them forward. It's therefore vital to understand the tax rules surrounding passive activity income in order to assess investments in passive activities correctly.
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?
Diverse income streams are a cornerstone of wealth creation. For busy entrepreneurs, putting all of your eggs in a single basket – even if that basket is your startup – is a bad idea. As you begin to generate revenue, place at least 10% of your revenue into an investment fund. I personally leverage mutual funds to provide consistent returns of the stock market while minimizing my risks associated with the volatility of individual stocks.