Do you want to learn how to make $10 a day? Whether you want to make an extra $10 every day or if you just need an extra $10 fast right now, you have options. Plus, if you are looking to make $10 a day every day, this is about $300 each month or $3,650…
Do you want to learn how to make $10 a day? Whether you want to make an extra $10 every day or if you just need an extra $10 fast right now, you have options.
Plus, if you are looking to make $10 a day every day, this is about $300 each month or $3,650 extra each year!
Surprisingly, you might not need to spend much time to reach this goal – maybe just an hour or less each day. The great thing about this is that many of the ways mentioned below are flexible and can be done on your own schedule.
Whether you work full-time, stay home with kids, or have a packed student schedule, there are lots of ways to make that extra $10. And even though $10 may seem small, if you do it every day for a month, it adds up to a few hundred dollars, which can be a big help for your budget or savings.
Getting some extra money can be easy by using what you already have online. You don’t need a second job to make $10 more each day. There are lots of online ways to do this. Maybe you want more money or just some spending cash without working a lot. Either way, you can find ways to meet your money goals.
Recommended reading: How To Get $20 PayPal Now
Best Ways To Make $10 a Day Fast
Below are the best ways to make $10 fast.
1. Paid online surveys
Earning $10 by taking surveys is a real possibility and a simple way to make money from home. Some survey companies will even give you $5 or $10 just for signing up and becoming a new member.
When I was repaying my student loans, I filled out surveys every week. I did this before work, during lunch, or after work. It was easy because I could do it whenever I had some free time and could do it on my own schedule. I enjoyed doing them because it was super flexible and would earn me some extra money without any physical labor or really even any brain power.
Survey companies pay you for answering surveys, watching videos, and trying out products. Sometimes, they might even send you free products to test. The best part is, signing up with these companies is completely free!
The paid online survey companies I recommend include:
These survey websites typically give out rewards as cash deposited into PayPal accounts or as free gift cards for places like Amazon.
2. Start a blog
Starting a blog is a creative way to make $10 a day.
Starting a blog won’t immediately earn you $10 a day because it takes time to set up. However, with time and effort, bloggers can usually start earning at least $10 a day in the future.
A blog is a website that contains articles, similar to what you’re reading now. You can start a blog on many different niches and topics like personal finance, recipes, travel, pet care, family life, and more. There are many different kinds of blogs available on the internet.
You can earn money from a blog by teaming up with companies for sponsorships, displaying ads, doing affiliate marketing (such as promoting products from Amazon), and selling items like ebooks, candles, T-shirts, and more directly on your blog.
This is how I make money online, earning well over $10 a day. It took me about 6 months to make my first $100 with my blog, so getting started does take time. It took around a year to reach about $5,000 a month and approximately 2 years to reach $10,000 a month.
You can learn how to start a blog with my free How To Start a Blog Course (sign up by clicking here).
3. High-yield savings accounts
A high-yield bank account is a low-risk way to earn extra money. These accounts offer a higher interest rate than regular savings accounts, so your money grows faster.
While you might not earn $10 every day from a high-yield savings account, it’s quite easy to earn $10 or more over time. You can then stack this with other methods to make $10 every day or $300 a month.
I personally use Marcus by Goldman Sachs because they have a very high interest rate. At the time of this writing, you can get up to 5.40% through a referral link bonus. So, if you have $10,000 saved, you could earn $540 in a year with a high-yield savings account like this. In comparison, with normal banks, your earnings would only be around $50 for the same amount saved.
4. Sell printables on Etsy
One way to make $10 a day from home is by selling printables on Etsy. Printables are digital products that buyers can download and print at home. Think planners, art, or even educational materials.
You have probably used printables in your life, just like most people have. I purchase printables all the time because they make my life much easier. It’s convenient to print things out and have them readily accessible when needed. I recently downloaded a digital printable that is a calendar of new activities to do with my toddler, in fact. (It has a specific new activity to do each day for her age group.)
You can learn more at How I Make Money Selling Printables On Etsy.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
5. Mystery shopping
Mystery shopping can be a fun way to earn money. If you enjoy shopping and going out, this option can help you make $10 a day.
Companies hire mystery shoppers to visit stores and behave like regular customers. You’ll make purchases, ask questions, and then give feedback on your experience.
Secret shoppers evaluate places like restaurants, stores, car dealerships, banks, and more.
My favorite mystery shopping company that I have personally used is BestMark. There are many other good mystery shopping companies as well.
I have mystery shopped a lot over the years. At one point, I was earning around $150 to $200 a month from it, as well as getting free restaurant meals, free retail items, and more. Most of the shops were very easy to complete and I could do them on my own schedule.
6. Get a raise at work
If you’re wanting to increase your daily earnings by $10, asking for a raise at your current job can be a great strategy as you would be simply continuing the job you already have and not having to find a second job.
Start by evaluating how your skills and experience contribute value to the company. Are you taking on additional responsibilities? Have you achieved any big goals or improved anything at work lately?
Remember, timing is everything when it comes to asking for a raise. I recommend setting up a private meeting with your boss to talk about your raise and make sure it’s a calm period in the work cycle, not the middle of a big project or problem.
Then, during your meeting, be direct about your request and explain how your hard work deserves additional compensation and talk about the value you bring to the company.
7. Answer questions in a focus group
Joining a focus group is a great way to earn $10 quickly, or potentially more! Now, you typically won’t be able to make $10 every single day with a focus group because they are more limited in availability, but you can make well over $10 in a single day with them.
A focus group is a small gathering of people who share their opinions about new products or services. Companies use these insights to improve their offerings.
I have participated in a focus group that paid me approximately $400 for just 75 minutes of my time. While this payment was higher than usual, most focus groups typically pay anywhere from around $50 to over $100 per hour. The amount you get paid can vary greatly depending on the length and topic of the study, but there are certainly studies that offer higher compensation than others.
One focus group company that I recommend joining is User Interviews.
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User Interviews pays very well for market research studies and these are some of the highest paying online surveys, with each paying $50 to $100 or more. The average pays over $60.
8. Donate plasma
Donating plasma can earn you between $20 to $50 each time you donate, and you can earn up to $300 a month if you donate regularly.
Plasma is the liquid part of your blood, and it’s in high demand for medical treatments. Your plasma can help individuals with immune deficiencies, bleeding disorders, and other health problems.
The process is similar to donating blood, but it takes a bit longer – usually about an hour. You’ll be comfortably seated during the procedure, and a machine will take your blood, separate the plasma, and return the blood cells to your body.
Typically, you can donate plasma twice a week. Most donation centers require a 48-hour gap between sessions to make sure that your body has time to recover.
Recommended reading: How to Make Money in One Hour: 15 Real Ways
9. Food delivery
If you want to make an extra $10 a day, food delivery is a good choice. It’s a flexible way to earn cash by helping people get their meals delivered right to their doorstep. With apps like Uber Eats, DoorDash, and Postmates, you can sign up and start delivering right away.
When you choose to be a food delivery driver, you work on your schedule. All you need is a reliable way to get around, like a car, bike, or scooter, and a phone. The exact amount you’ll make can depend on the time of day, your location, and how many orders you take.
Typically, you receive more than $5 for each delivery. Plus, customers may tip you for your service as well.
Recommended reading: How To Make $5 Fast
10. Deliver groceries
If you’re looking for a way to make an extra $10 a day, delivering groceries might be the perfect side gig for you. With many people busy or preferring to stay home, you can help by bringing their food shopping right to their doorstep.
Popular apps like Instacart and Shipt are always looking for shoppers. You’ll need to meet some basic requirements, like having a car and a phone. After you’re approved, you can start to accept delivery jobs through the app.
You can choose when you want to work. Maybe it’s after your day job or just on weekends. Each trip to the store and delivery earns you money, and you can see your earnings add up with every order you complete.
I have ordered groceries through Instacart many times when I’m too tired to shop, when I’m on vacation and want groceries delivered straight to the vacation home, and when I’m running low on time at home. It is a great service to have!
11. Transcribe
Transcribing is when you get paid to type out what you hear, and it’s a way to make $10 a day if you have a good ear and can type fast.
Transcription jobs are found online and offer flexible schedules. To start, you’ll need a computer and a solid internet connection.
As a beginner, you can earn around $15 an hour, but with more experience, that number can go up.
Recommended reading: 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly
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In this free training, you will learn what transcription is, why it’s a highly in-demand skill, who hires transcriptionists, how to become a transcriptionist, and more.
12. Freelance on Fiverr
If you’re looking to earn an extra $10 a day, Fiverr is a platform to try out if you want to freelance.
Fiverr lets you sell skills you’re good at, such as graphic design, data entry, social media management, writing blog posts for others, and more. You can sell thousands of different kinds of freelance gigs, and you can make your service as customized as you want.
I have freelanced a ton over the years, and it’s a great way to make money from home without having to pay anything to get started. You just need your skills and time!
13. Walk dogs
If you love dogs and want to learn how to make $10 a day (or more) without paying, then walking dogs is a side hustle you can easily get started with.
Dog walking apps like Rover help you to list your dog walking services. This is an in-demand service where you may be able to earn $15 to $30 an hour walking dogs.
Once you’re signed up on a dog walking platform, you’ll get alerts for dog walking jobs in your area. You can choose the ones that fit your schedule. A typical session lasts about 30 minutes, and you might walk one or more dogs during this time.
If you have the chance to walk multiple dogs at once, then you may be able to earn more money by aligning many dog walking gigs at the same time. Some clients do pay more for their dog to be walked alone if that’s what they want.
I have two close family members who are dog walkers and they both really love it!
14. Invest in stocks for dividends
If you’re looking to make some extra money daily, you can try dividend stocks. These are shares of companies that give you money back, called dividends, just for owning them. This is like getting a “thank you” for investing in the company.
To make $10 a day, you’d need to earn around $300 a month from dividends.
Dividends work by paying shareholders a portion of a company’s earnings per share of stock they own. For example, if you own 10 shares of Company ABC and they pay $5 in cash dividends per share each year, you will receive $50 in dividends annually. Dividends are usually paid on a monthly, quarterly, or yearly basis, with quarterly payments being the most common (four times a year). In this scenario, the $5 in cash dividends per year would likely be distributed as $1.25 per quarter for each share of stock you own.
Recommended reading: What Are Dividends & How Do They Work? A Beginner’s Guide
15. Play games online
If you enjoy playing games, you can actually make money from it! While you might not consistently earn $10 every day, you can likely make $10 occasionally by doing something in your spare time.
Game apps can pay you real money because they generate revenue from ads and in-app purchases. They then share a portion of their earnings with players to keep them engaged and playing their games.
Here is a quick list of popular online game platforms that offer real cash rewards:
Swagbucks
KashKick
InboxDollars
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Swagbucks is a site where you can earn points for answering surveys, shopping online, watching videos, using coupons, and more. You can use your points for gift cards and cash.
16. Sell things you no longer need
A simple way to earn $10 quickly (or even more) is by selling items you no longer need around your home.
Everyone has things like old books, clothes, unused gift cards (to many places such as Walmart, Starbucks, Target, Amazon, and more), or electronics that they no longer use. Selling these items can help you make money fast.
You have several options for selling your old stuff, like eBay, Facebook Marketplace, Mercari, Craigslist, or even holding a garage sale at your home.
17. Charge scooters
If you’re looking to make an extra $10 each day, then you may be able to find a side gig as a scooter charger for companies like Lime or Bird. These companies pay individuals to pick up, charge, and redeploy their electric scooters around the city.
You can get started by signing up on the company’s website by submitting your name, email, and location. You’ll need to download an app that will guide you to scooters needing to be charged.
Typically, a single scooter gives you around $3 to $5 once fully charged. It might sound small, but charging just a couple of scooters can quickly add up to your $10 daily goal.
18. Babysit
Babysitting is a popular way to bring in some extra cash. If you enjoy spending time with children and have some free hours, this could be a smart pick for making $10 a day or even more.
On average, you could earn between $15 to $25+ per hour for watching kids. The rate might go up if you’re taking care of more than one child or if the children need special attention.
Jobs can range from a couple of hours after school to full days. This makes babysitting a flexible job that can fit into your schedule.
19. Sell on Amazon
If you’re looking to make some cash each day, you might try selling retail items on Amazon. Amazon’s Fulfillment by Amazon (FBA) program can be a great way. You send your products to Amazon, and they handle shipping and customer service for you.
Here’s a quick start guide:
Sign up – Creating an Amazon seller account is your first step. It’s pretty easy and you can do it online.
Choose your products – Find items you want to sell.
List your items – Describe what you’re selling, add pictures, and set your price. Make sure it looks good so people want to buy it.
Ship to Amazon – Box up your items and send them to an Amazon warehouse.
Sell and earn – Once your products are listed, you can start making sales. Amazon gives you a part of the sale price, and that’s how you make your money.
If you want to learn more about starting an Amazon business, I recommend signing up for this free training that will teach you how to sell products on Amazon and make $100 to $500 per day.
20. Rent out your storage space
If you have unused space in your home like a closet, garage, or even a spare bedroom, you can turn it into money! Yes, by renting out your storage space, you could easily make a payout of around $10 a day or $300 a month without much work.
A site to use to rent out your space is Neighbor.
Frequently Asked Questions
Below are answers to common questions about how to make $10 a day fast.
How can I make $10 a day?
You can make $10 a day by doing small freelance gigs, completing online surveys, or selling items that you no longer need. Another way could be to save your spare change from everyday purchases (such as with the Acorns app).
How to make $10 an hour online?
You might be able to earn $10 an hour online by selling virtual assistant services, content writing, graphic design, or tutoring through platforms made for freelancers. Your hourly rate will depend on the skills you have and the demand for them.
How to make $10 a day for free? Can I make $10 daily without any upfront investment?
Making $10 a day for free is possible through apps that reward you for participating in surveys or completing certain tasks, freelancing services like writing or virtual assisting, and walking dogs. You can learn more about this at 22 Ways To Make Money Online Without Paying Anything.
How can kids make $10 each day?
Kids can make $10 a day by doing chores for neighbors (such as by going around the neighborhood and seeing who needs their lawn cut or leaves raked), setting up a lemonade stand, or pet sitting. It’s great for teaching them about the value of work and earning at a young age.
How To Make $10 a Day – Summary
I hope you enjoyed this article on how to make $10.
There are many ways to make an extra $10, whether you need $10 right now or if you want to make $10 each day.
Making an extra $10 can be helpful, whether you have a full-time job, are a stay-at-home parent and just need to make a little extra money, or whatever else.
If you like sharing your thoughts, you can make money doing online surveys. If you’re good at crafts and art, selling printable designs on Etsy could be a good fit. For those who love pets, walking dogs using apps can bring in extra cash. And if you prefer working at night, you can offer your skills on freelance websites after the day is over to make that extra $10.
These little bits of money each day can add up and give your budget more room to move each month.
Are you looking to learn how to make $10 a day or fast?
Inside: Proofreading is more than just catching errors; it’s an essential final touch in the writing process. If you want to turn your attention to detail into a career, allow this guide to enlighten your path to becoming a professional proofreader.
In a rapidly advancing digital age characterized by burgeoning AI capabilities, the art of proofreading remains not only relevant but fundamentally essential.
Today, proofreaders are the unsung guardians of clarity, maintaining and enhancing the rich tapestry of the written word. They are the bridge between AI’s raw computational power and the intricate subtleties of human expression. To embark on In today’s AI-driven era, the role of a proofreader is evolving yet remains an indispensable asset in the echelons of written communication.
While spellchecker tools and grammar correction algorithms, such as those embedded in Google Docs and implemented by Grammarly, streamline basic editing tasks with a click, the nuanced understanding of language intricacies still falls within the human domain. It is the human eye that captures the essence of context, tone, and the writer’s singular style—factors that AI, in its current state, is yet to fully comprehend.
Becoming a proofreader offers the flexibility to be your own boss and set your own schedule, allowing you to work around other life commitments.
With the consistently high demand for proofreading and the ability to work from anywhere, it provides both a stable career path and the opportunity to experience new and interesting careers.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Understanding What a Proofreader Does
A proofreader is a guardian of grammar, a sentinel of syntax—a final reviewer ensuring that texts are free from errors before they reach the public.
This vital role involves meticulous examination for any slips that might diminish the quality and clarity of the final product.
How do I become a proofreader with no experience?
Breaking into proofreading without prior experience may seem daunting, but it’s entirely attainable.
Initiate your journey by seeking comprehensive training, such as a proofreading course, which often includes substantial practice material to simulate real-world experience.
This is one of the best ways to make money online for beginners.
What qualifications do I need to be a proofreader?
While there’s no fixed rulebook for proofreading qualifications, a command of language and a fine-tuned eye for detail are essential.
A formal certification is beneficial, but it’s your demonstrated skills and experience that will truly make you a sought-after proofreader.
How to Become A Proofreader
Breaking into the world of proofreading can transform your passion for words into a lucrative career or a flexible side job.
This section will explore the meticulous path to becoming a professional proofreader, offering practical tips to help you refine your skills, equip yourself with the necessary tools, and navigate the job market effectively. From cultivating a deep love for reading to marketing your expertise, we’ll guide you through each step to ensure your journey toward proofreading proficiency is clear and achievable.
This is how you can make 10k a month.
Step #1 – Acquiring Essential Proofreading Skills
Attention to detail is the cornerstone of proofreading, as it enables you to catch mistakes that others may overlook. Equally crucial is a strong command of the language, allowing you to navigate through intricate grammar and punctuation with precision, ensuring the text reads flawlessly.
Understanding varied writing styles and mastering style guides like Chicago, APA, and AP is pivotal in proofreading.
This knowledge ensures accuracy in diverse documents, adapts to client preferences, and maintains the document’s integrity according to recognized standards.
Make sure you are great at meeting deadlines!
Step # 2- Certification and Training for Proofreaders
Deciding on a proofreading certificate depends on your career strategy. While not mandatory, a certification can bolster your credibility, demonstrate your commitment to the craft, and may provide a competitive edge when approaching potential clients or employers in the industry.
Selecting the right proofreading course is crucial for gaining a strong foothold in the industry.
Search for programs with a balanced mix of theory and applied learning, mentorship from seasoned professionals, and ideally, one that aligns with your specific area of interest within the broad field.
Also, look for courses that help you to land your first proofreading gig. You want to see any typo fast!
Transcript Proofreading
Get the step-by-step guide Caitlin Pyle used to build a thriving at-home business making a full-time income!
A booming legal industry means that transcript proofreaders are in higher demand than ever…
Step #3 – Building Your Proofreading Toolkit
Every proofreader needs a reliable set of tools. Essential software includes Microsoft Word for detailed editing, Google Docs for easy collaboration, Grammarly for grammar checks, the Hemingway App for readability improvements, and McGraw Hill’s Proofreading Guidebook as a comprehensive reference.
Crafting an efficient proofreading process is key to maintaining high standards of work.
This involves systematic reading for different types of punctuation errors or grammar mistakes, employing tools strategically, and setting up checklists that align with specific document requirements to ensure a thorough review every time.
Step #4 – Gaining Practical Experience
Practical experience in proofreading is invaluable as it not only sharpens your eye for detail but also builds a robust portfolio that demonstrates your ability to handle diverse materials. Many people start with a blog.
It provides tangible proof of your skills to prospective clients, showcasing your efficiency in enhancing various texts, which is often more convincing than theoretical knowledge alone.
Formal Education vs. On-the-Job Experience: Formal education in English or communication can provide foundational knowledge, but isn’t always required for proofreading roles. On-the-job experience develops the practical skills needed to succeed in the field.
Volunteering and Internship Opportunities: Volunteering and internships offer valuable experience and are a practical approach to entering the publishing industry. Seek opportunities for content editing for student publications, small businesses, or nonprofit organizations to hone your skills and grow your professional network.
Practice with Real-world Editing Exercises: This prepares you for client work. Utilize resources like Purdue Writing Center’s exercises or the Chartered Institute of Editing and Proofreading’s quizzes to test and refine your abilities in a practical, hands-on manner.
Step #5 – Marketing Yourself as a Proofreader
Marketing yourself as a proofreader is pivotal in attracting clients and establishing a steady work stream in a competitive industry. It is the key to building brand awareness and showcasing your expertise, differentiating your services in the crowded marketplace.
Creating a Professional Resume and Portfolio: To present yourself as a credible proofreader, craft a resume highlighting relevant skills and experiences. Include a portfolio showcasing a range of proofreading projects. If you’re starting, include testimonials and detail any related training or certificates to demonstrate your commitment and competence.
Networking and Leveraging Online Platforms: Utilize platforms like LinkedIn to connect with industry peers and potential clients. Participate in forums and proofreading groups to stay informed and visible in the community. Engaging actively online can lead to valuable opportunities and collaborations.
Delve deeper into your craft with advanced courses and stay updated on language trends. Embracing niche specialization, such as legal or technical documents, can heighten your expertise and attract a more specific clientele.
Step #6 – Finding Freelance Proofreading Jobs
For entry-level proofreaders, platforms like Fiverr can kickstart your gig journey despite its low-cost market reputation. Check out Upwork or AngelList for a broader scope of opportunities.
Specialized job boards or proofreading service companies can also offer targeted job prospects to grow your experience.
Professional courses, such as those offered by Proofread Anywhere, can significantly enhance your skills, thereby increasing your likelihood of securing clients.
Step # 7 – Setting Competitive Rates and Billing Clients
Determining competitive rates for your proofreading services involves accounting for your skill level, the complexity of the work, and industry standards.
According to Proofread Anywhere, those who are starting can expect to earn around $0.03 per word, while proofreaders with a few years of experience often earn around $0.10 to $0.15 per word.
Remember to underscore value over price to clients, and utilize professional invoicing software for billing.
For many, this provides a great life-work balance for those wanting to make money as a stay at home mom.
Learn the Skill to Proofread Anywhere
Are you passionate about words and reading?
If so, proofreading could be a perfect fit for you, just like it’s been for countless of my readers!
Learn how you can create a freelance business as a proofreader.
Step #8 – Scaling Your Proofreading Career
Scaling your proofreading business involves more than just honing your skills; it requires a strategic approach to marketing to attract a broader client base. By concentrating on active marketing techniques like networking and reaching out to potential clients, you can accelerate the growth and scalability of your proofreading services.
Transitioning from freelancing to business ownership requires deliberate planning and goal-setting. You must establish a realistic timeline and create a comprehensive business plan outlining services, target clients, and marketing strategies.
Don’t forget to consider also the administrative and financial duties that come with business management.
Also, continuous skill improvement is critical to staying competitive as a proofreader.
FAQs
No, a degree is not a prerequisite for becoming a proofreader. Various paths lead to a career in proofreading, and while some positions may require a degree, many others prioritize skill, precision, and practical experience over formal education.
According to Proofread Anywhere, a proofreader can earn an annual salary of around $53,733 per year. However, the salary depends on experience, skill, niche, and who you work for.
But with the right strategies, the potential to earn more is significant, especially for skilled freelancers.
Without experience, focus on platforms offering entry-level proofreading jobs such as Fiverr, Upwork, or FlexJobs. Networking can also be a powerful tool; let your personal and professional contacts know you’re offering proofreading services. Finally, consider volunteering to build your portfolio and gain references.
Now, How to get Proofreading Work?
Embarking on a journey to become a sought-after proofreader can be significantly streamlined by enrolling in the Proofread Anywhere course.
By choosing this comprehensive program, individuals gain access to expert knowledge and practical tips from someone with proven success in the industry.
Not only will the course equip you with the essential skills needed to identify errors and enhance text quality, but it also serves as a springboard for securing gigs and establishing a thriving freelance business.
Additionally, Proofread Anywhere connects you with a network of like-minded professionals, which can be invaluable as you navigate the competitive field of proofreading. Set yourself apart from the competition by starting with a course that offers a direct route to proficiency and professional recognition in the proofreading world.
If you are looking to make 5000 dollars fast, this is a great method.
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Do you want to make money from your phone? I have been making money from my phone for many years now, and it’s a great way to make extra income or even a full-time income! Your phone can help you make money in many ways too. You can sell things you don’t need or use…
Do you want to make money from your phone?
I have been making money from my phone for many years now, and it’s a great way to make extra income or even a full-time income!
Your phone can help you make money in many ways too. You can sell things you don’t need or use your skills on freelance platforms. Answering surveys, selling photos, or being a virtual friend can also make you money, all from wherever you are comfortable.
Best Ways To Make Money From Your Phone
Below are the best ways to make money from your phone.
1. Answer surveys
You can earn money with your phone by answering surveys. Companies pay for your opinion, and you can do this whenever you have free time, such as when you’re just sitting on the couch watching TV with your phone in your hand.
Surveys are like a bunch of questions that companies ask to find out what you like or what you think about something. They might ask about the food you eat, the games you play, or even about your shopping habits.
You answer these questions, and in return, they give you money, points, or free gift cards (such as free Amazon gift cards) as a way to thank you for your time.
Some of the paid online survey companies I recommend are:
Here are 11 Paid Online Survey Sites if you want to learn more.
I have done many paid surveys over the years, and I love how I can answer them right from my phone and whenever I want. I can answer them while watching a video, during a lunch break, before or after work, and more.
2. Sell photos
You can use your phone to take pictures and make money. Selling stock photos is a fun way to make money through passive income without actively working for it.
Not all photographers need a fancy camera to start. Your phone can work perfectly and the newest smartphones can take great, high-quality photos. My phone can take great pictures and it wasn’t super expensive – it’s just a normal Android phone.
With stock photography, you can upload pictures you’ve taken with your camera or phone to a platform like Depositphotos. When someone buys one of your photos, you earn a commission.
Websites, companies, and blogs use stock photos for many reasons. Businesses use them to improve their content, websites, or overall appearance when they might not have the time to take all the photos they need.
I personally often use stock photos in my blog posts, and I know many others who do too. The pictures throughout this article (yes, the one that you are reading) are all stock photos.
Stock photography includes pictures of things such as:
Travel and landscapes
Business and finance, like laptops, offices, and people working
Family, such as parents and children
Household items, such as a living room and kitchen
Animals, such as pets and wildlife
Vehicles like cars and boats
Health and wellness, such as fitness-related images, healthy food, someone working out
Sports, from professional events to casual games
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
3. Instacart Shopper
Making money through your phone is possible with grocery and food delivery apps like Instacart. As an Instacart Shopper, you get paid to shop for groceries and deliver them to people who order online.
Getting groceries delivered is a service that lots of people are using more and more. I’ve used it a few times when I didn’t have time to go shopping or didn’t have a car.
With this job, you have the freedom to make your own schedule, and you can get paid pretty fast – sometimes the same day.
Delivering groceries is a popular side job, and all you need is a valid driver’s license, a car, and your cell phone.
You earn money for each delivery and get to keep all your tips. Platforms like Instacart and Shipt can help you make around $15 to $20 per hour.
Learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
4. JustAnswer
JustAnswer is a site where you can make money by using your phone to help others. If you have skills or knowledge in a particular area, you can answer questions and earn cash.
JustAnswer states that you can make $2,000 to $7,000 a month as an expert answering questions online on their site.
People ask questions, and the site matches them with an expert who can answer. For example, someone might ask how to change their oil or why their cat is sick. As an expert, you’ll be answering questions and giving personalized help through text chat.
There are experts in fields like mechanics, doctors, lawyers, veterinarians, home experts, appraisers, computer and tech experts, and more.
You can work whenever you want from your computer or cell phone, and you get to choose which questions you want to answer.
To get started, apply online on JustAnswer. They’ll verify your credentials (every expert on this platform is verified by a third party and needs to have licenses, education, or employment in their field of expertise). Once approved, you’ll have a quick meeting with the JustAnswer team to learn how to use the platform.
It takes about one week to become verified, and you can receive payments through direct deposit, PayPal, or Venmo.
Recommended reading: 28 Ways To Get Paid To Text
5. DoorDash
When you want to make money with your phone, DoorDash is one way you can do that. DoorDash is a gig app where you deliver food to people.
Working with DoorDash means you’re part of the gig economy, delivering restaurant meals to customers. You have the flexibility to pick your hours and decide when and where you want to work.
Depending on your location, you can deliver food with a car or by bike.
The app is your main tool for the job, and it shows you your orders, where to go, and how to get there.
Your earnings depend on each delivery. You can make $2 to $10 or more, plus tips.
Please click here to sign up for DoorDash.
6. Fiverr
Fiverr is a way to make money from your phone as it’s an online platform where people do all sorts of online work, like writing, designing, or making videos.
Some services you can sell to make money from your phone include:
Chat support customer service – Manage customer service for a business as a freelancer.
Social media posting assistant – Help clients schedule and post content on their social media platforms, such as Instagram and Facebook.
Virtual fitness coaching – You can give fitness coaching sessions or create personalized workout plans from your phone.
Online language lessons – Teach language lessons through video calls or voice messages.
Life coaching – Share motivational messages, life advice, or coaching sessions through your phone, such as in phone calls or texts.
Mobile app testing – Test and give feedback on mobile apps for developers.
When someone buys your service from your listing, they pay Fiverr. Fiverr takes 20%, and you receive 80% of the funds after a 14-day pending period.
Another popular platform somewhat similar to Fiverr for freelancers is Upwork.
7. RentAFriend
If you’re looking to make money from your phone, RentAFriend could be an interesting choice. This platform allows you to get paid for being a friend.
As a RentAFriend, you might respond to text messages and have phone conversations with the person. You can be a friend in person, over video chat, or through text messages, depending on your preference.
With RentAFriend, you set your own hours and the price for your time. Earnings can range from $10 to $50 per hour, depending on what you decide.
Here’s how it works:
Sign up on the RentAFriend website.
Create a profile that shows who you are and what kinds of activities you enjoy.
Once your profile is live, people can find you and request your friendship services.
People join this site to find a friend and someone to talk to, and that’s where you come in.
8. Papa app
Papa is a website where you can chat with older adults, help them around their house and with shopping, and more.
You’re simply giving them some extra support with their day-to-day tasks, and you can earn money right from your phone for some of these tasks.
As a Papa Pal, you get to set your own schedule. The amount you can earn per hour varies depending on your location.
9. BetterHelp therapist
If you’re a licensed therapist, you might like making money using your phone with BetterHelp. BetterHelp is an online platform where therapists help people.
You can work with clients by chatting, phone calls, or video calls. You’ll need good internet and a private place to talk.
As a therapist on BetterHelp, estimated earnings are around $100,000 per year for working 40 hours per week. You can also work part-time at around 5 to 15 hours per week and earn around $8,000 to $27,000 each year.
To join, they require at least 3 years of experience in therapy for adults, couples, or teens.
10. Play games on your phone
There are many money making apps where you can get paid to play games on your phone.
Game apps pay real money rewards because they earn money through ads and in-app purchases. To motivate you to keep playing their games, they share a portion of their earnings with you.
Here’s a quick list of the top game apps that pay real cash:
KashKick
Swagbucks
InboxDollars
When selecting gaming apps to make money, it’s important to check reviews and understand how you receive your earnings. Be cautious with apps that require payment to play or promise rewards that seem too good to be true. Also, keep track of the time you spend playing games to make sure it is worth it.
Recommended reading: 23 Best Game Apps To Win Real Money
11. User Testing
UserTesting is a way you can make money by trying out websites and apps. Companies will pay you for your honest thoughts on how easy they are to use.
To participate in tests, you’ll need a computer or a smartphone, an internet connection, and a microphone. Some tests may also require a webcam.
When you test websites, you look out for things that don’t work well or can be confusing. Your feedback helps companies improve as they want real opinions, not just quick answers.
Here’s how it works:
Sign up with a user testing site.
They’ll give you tasks, like finding something on a website. Most tests take about 15 to 20 minutes.
You record your screen and talk about what you’re thinking.
After you’re done, you send your feedback.
You get paid! You could earn around $10 per test.
Payments are usually made through online services like PayPal.
I have personally paid someone to do a UserTesting review on this site, Making Sense of Cents. It’s a great way to see what a stranger thinks of your website and they gave me tons of helpful tips and let me know what changes I should make to make my website better for readers.
12. Sell used items online
If you have stuff you don’t use anymore, selling it online can be a smart way to make some money. Your old phones, clothes, games, and books could be worth something to someone else.
And, you can do all of this right from your cell phone!
Whether you have old things around your home that you want to sell or if you want to start a reselling business, there are many apps that make it easy to sell stuff right from your phone.
Some of the best selling apps are Poshmark for clothing, Worthy for jewelry, Facebook Marketplace for local sales, and Decluttr for electronics.
I have personally sold many items over the years on various sites to make extra income. At one point, I even had a small reselling business. So, I understand firsthand how helpful these sites and apps can be!
13. Sell your data
You can earn money from your phone by selling your data through apps. These apps pay you for the data you don’t use. You might be concerned about safety, but in most cases, it is safe.
These apps usually operate in the background, helping companies understand how people use the internet. Data apps aren’t full-time jobs and you won’t get rich from them, but they can be easy side gigs.
Honeygain is one app where you can earn cash, and you get paid for data you’re not using. You just install the app, and it runs without you doing anything extra.
You receive payment based on the amount of traffic passing through your connection, with Honeygain paying $1 for every 10 GB of traffic.
14. Instagrammer
If you love sharing photos and videos, Instagram can be a great way for you to make some extra money with your social media accounts.
I have made income from Instagram over the years, and while it’s not my full-time income, it is a fun way to make money from my phone.
This is because you can start an Instagram on whatever niche you want, such as fitness, travel, fashion, family, and more. So, you may be able to have a lot of fun managing and growing your social media account.
Then, you’ll want to make sure you regularly share high-quality content, use relevant tags, post reels, and interact with your audience to steadily increase your follower count.
15. Get paid to walk
You can actually make money just by walking! There are apps that track your steps and reward you for staying active. You can download these to your phone, start walking, and watch your steps turn into rewards.
Sweatcoin is one app you might like. If you’re over 13 and have a smartphone, you can join. It changes your walking into points that you can use. You can get stuff like gift cards or even support charities.
Getting paid is easy:
Join an app – Sign up for an app that fits you.
Walk and collect – Carry your phone and collect points as you walk.
Earn rewards – Swap your points for things like money to PayPal or cool products.
Some apps might hook up to a fitness tracker. This way, if your phone isn’t with you, you won’t miss out on any steps.
Frequently Asked Questions
Below are answers to common questions about how to make money from your phone.
How can I use my phone to make money?
You can make money on your phone by selling things you no longer need on apps like Decluttr or through your own store on platforms like Shopify. You could also complete online surveys, sign up for market research, or perform tasks on gig economy apps.
How can I make passive income on my phone?
One way to make passive income from your phone is to sell stock photography. You could take pictures from your phone, and then sell them over and over again online!
How can teenagers earn money using mobile apps?
Teenagers can earn money from their phones in their spare time by taking online surveys, performing tasks, selling products online, or using apps that reward users for maintaining good habits, like staying active.
How can I make $100 a day on my phone?
There are many ways to make $100 a day from your phone, such as selling items online and signing up for gig jobs like Instacart.
What are the quickest ways to make money on your phone?
The fastest ways to make money with your phone include taking surveys, using cash back shopping apps (because you may shop online a lot already!), playing games that have real rewards, and delivering groceries or meals with gig apps.
How can I learn how to make money with my phone without any investment?
There are many ways to make money from your phone for free, such as answering surveys, selling items that you already own (such as old clothing that you no longer wear, CDs, DVDs, or old devices that you don’t use anymore), driving for Uber, delivering groceries with Instacart, and more.
What apps can I use to make money with my phone?
Apps like Instacart, Papa, and Uber are all good ways to make side hustle money with your phone. There are many other ways that I didn’t mention above that are good options, such as Fetch Rewards (scan your receipt from grocery shopping), Acorns (micro-investing app for your spare change), Ibotta (a grocery shopping app), Neighbor (rent out your storage), Lyft (drive others around), TaskRabbit (sell your handyperson services, such as building furniture), OfferUp (selling stuff that you no longer need), and Rakuten (get cash back on your online shopping).
These apps are available on both Google Play stores and the iOS app store.
How To Make Money From Your Phone – Summary
I hope you enjoyed this article on the many ways to make money from your phone.
As you can see from the above, there are many ways to make extra cash from your phone, from part-time gigs to full-time income. Whether you have an Android or Apple phone, there are many ways on the list above that you may want to try out.
What do you think is the best way to make money with a phone?
Millions of employees work from home at least part time. They’ve carved out dedicated office space and plopped laptops on kitchen counters and in closets. They almost never can declare the home office tax deduction.
Millions of self-employed people have also created workspaces at home. If they use that part of their home exclusively and regularly for conducting business, and the home is the principal place of business, they may be able to deduct office-related business expenses.
Why the difference? The Tax Cuts and Jobs Act nearly doubled the standard deduction and eliminated many itemized deductions, including unreimbursed employee expenses, from 2018 to 2025.
Read on to learn whether or not you may qualify for the home office tax deduction.
What Is a Home Office Tax Deduction?
The home office tax deduction is available to self-employed people — independent contractors, sole proprietors, members of a business partnership, freelancers, and gig workers who require an office — who use part of their home, owned or rented, as a place of work regularly and exclusively.
“Home” can be a house, condo, apartment, mobile home, boat, or similar property, and includes structures on the property like an unattached garage, studio, barn, or greenhouse.
Eligible taxpayers can take a simplified deduction of up to $1,500 or go the detailed route and deduct office furniture, homeowners or renters insurance, internet, utilities needed for the business, repairs, and maintenance that affect the office, home depreciation, rent, mortgage interest, and many other things from taxable income.
After all, reducing taxable income is particularly important for the highly taxed self-employed (viewed by the IRS as both employee and employer.)
An employee who also has a side gig — like driving for Uber or dog walking — can deduct certain expenses from their self-employment income if they run the business out of their home. 💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.
Am I Eligible for a Home Office Deduction?
People who receive a W-2 form from their employer almost never qualify.
In general, a self-employed person who receives one or more IRS 1099-NEC tax forms may take the home office tax deduction.
Both of these must apply:
• You use the business part of your home exclusively and regularly for business purposes.
• The business part of your home is your main place of business; the place where you deal with patients or customers in the normal course of your business; or a structure not attached to the home that you use in connection with your business.
Regular and Exclusive Use
You must use a portion of the home for business needs on a regular basis. The real trick is to meet the IRS standard for the exclusive use of a home office. An at-home worker may spend nine hours a day, five days a week in a home office, yet is not supposed to take the home office deduction if the space is shared with a spouse or doubles as a gym or a child’s homework spot.
There are two exceptions to the IRS exclusive-use rules for home businesses.
• Daycare providers. Individuals offering daycare from home likely qualify for the home office tax deduction. Part of the home is used as a daycare facility for children, people with physical or mental disabilities, or people who are 65 and older. (If you run a daycare, your business-use percentage must be reduced because the space is available for personal use part of the time.)
• Storage of business products. If a home-based businessperson uses a portion of the home to store inventory or product samples, it’s OK to use that area for personal use as well. The home must be the only fixed location of the business or trade.
Principal Place of Business
Part of your home may qualify as your principal place of business “if you use it for the administrative or management activities of your trade or business and have no other fixed location where you conduct substantial administrative or management activities for that trade or business,” the IRS says.
Can You Qualify for a Home Office Deduction as an Employee?
Employees may only take the deduction if they maintain a home office for the “convenience of their employer,” meaning the home office is a condition of employment, necessary for the employer’s business to function, or needed to allow the employee to perform their duties.
Because your home must be your principal place of business in order to take the home office deduction, most employees who work part-time at home won’t qualify.
Can I Run More Than One Business in the Same Space?
If you have more than one Schedule C business, you can claim the same home office space, but you’ll have to split the expenses between the businesses. You cannot deduct the home office expenses multiple times.
How to Calculate the Home Office Tax Deduction
The deduction is most commonly based on square footage or the percentage of a home used as the home office.
The Simplified Method
If your office is 300 square feet or under, Uncle Sam allows you to deduct $5 per square foot, up to 300 square feet, for a maximum $1,500 tax deduction.
The Real Expense Method
The regular method looks at the percentage of the home used for business purposes. If your home office is 480 square feet and the home has 2,400 square feet, the percentage used for the home office tax deduction is 20%.
You may deduct 20% of indirect business expenses like utilities, cellphone, cable, homeowners or renters insurance, property tax, HOA fees, and cleaning service.
Direct expenses for the home office, such as painting, furniture, office supplies, and repairs, are 100% deductible. 💡 Quick Tip: A major home purchase may mean a jumbo loan, but it doesn’t have to mean a jumbo down payment. Apply for a jumbo mortgage with SoFi, and you could put as little as 10% down.
Things to Look Out for Before Applying for the Home Office Tax Deduction
If you’re an employee with side gigs or just self-employed, it might be a good idea to consult a tax pro when filing.
To avoid raising red flags, you may want to make sure your business expenses are reasonable, accurate, and well-documented. The IRS uses both automated and manual methods of examining self-employed workers’ tax returns. And in 2020, the agency created a Fraud Enforcement Office, part of its Small Business/Self-Employed Division. Among the filers in its sights are self-employed people.
The IRS conducts audits by mail or in-person to review records. The interview may be at an IRS office or at the tax filer’s home.
A final note: Taking all the deductions you’re entitled to and being informed about the different types of taxes is smart.
If you’re self-employed, you generally must pay a Social Security and Medicare tax of 15.3% of net earnings. Wage-earners pay 7.65% of gross income into Social Security and Medicare via payroll-tax withholding, matched by the employer.
So self-employed people often feel the burn at tax time. It’s smart to look for deductions and write off those home business expenses if you’re able to.
To shelter income and invest for retirement, you might want to set up a SEP IRA if you’re a self-employed professional with no employees.
Recommended: First-Time Homebuyers Guide
The Takeaway
If you’re an employee working remotely, the home office tax deduction is not for you, right now, anyway.
If you’re self-employed, the home office deduction could be helpful at tax time. To qualify for the home office deduction, you must use a portion of your house, apartment, or condominium (or any other type of home) for your business on a regular basis, and it generally must be the principal location of your business. This is something to keep in mind if you’re in the market for a new home, since writing off a portion of your home expenses could help offset some of the costs of homeownership.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much can I get written off for my home office?
Using the simplified method of calculating the home office deduction, you can write off up to $1,500. Using the regular method, you’ll need to determine the percentage of your home being used for business purposes. You may then be able to deduct that percentage of certain indirect expenses (like utilities, cellphone, cable, homeowners or renters insurance, property tax, HOA fees, and cleaning services). Direct expenses for the home office, such as painting, furniture, office supplies, and repairs, are generally 100% deductible.
Can I make a claim for a home office tax deduction without receipts?
The simplified method does not require detailed records of expenses. If using the regular method, you should be prepared to defend your deduction in the event of an IRS audit.
The IRS says the law requires you to keep all records you used to prepare your tax return for at least three years from the date the return was filed.
What qualifies as a home office deduction?
Things like insurance, utilities, repairs, maintenance, equipment, and rent may qualify as tax deductions.
Photo credit: iStock/Marija Zlatkovic
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
[cd_ tax] Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn investment and tax strategies to help you achieve financial security and prepare for a prosperous retirement.
How can you balance saving for emergencies and investing for the future? What strategies can you employ to maximize your tax benefits and build a secure financial future? NerdWallet’s Kim Palmer and Alana Benson discuss investment strategies and tax planning to help you understand how to navigate your financial journey effectively. They begin with a discussion of investment strategies, with tips and tricks on understanding different investment accounts like 401(k)s and IRAs, leveraging compound interest, and the importance of starting investments early. Then, Alana discusses tax planning and filing in-depth, covering the intricacies of different tax forms like W-4s and W-2s, the significance of estimated taxes for freelancers, and strategies for managing capital gains taxes.
Kim and Alana delve into retirement planning and the challenges of active versus passive investing. They provide a framework for prioritizing your finances, emphasizing the creation of an emergency fund, taking advantage of employer 401(k) matches, and understanding the role of asset allocation based on age and risk tolerance. Additionally, they tackle the decision-making process in personal finance, such as choosing between paying off debt and investing, and the pros and cons of having a financial advisor.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Hey listener, we’ve got a special episode in store for you today. Our investing and tax Nerds recently hosted a webinar going deep into how you can level up your investing and tax strategy. So we packaged that up into a podcast episode for you. The Nerds talk about what you need to know about different investing accounts, how to get help with your taxes and more. So here’s the webinar.
Kim Palmer:
Welcome everyone. I am Kim Palmer. I’m a personal finance writer at NerdWallet where we help people make smart decisions. One important note, we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. NerdWallet Inc is not an investment advisor or broker and does not provide personal financial advisory services. Today we are excited to talk to you about the basics of investing and taxes and we think we have some helpful info to share with you. You can always find more at nerdwallet.com or on the NerdWallet app. Our goal today is to kick off a helpful discussion about investing and tax information and tools. Alana Benson writes about investing topics including stocks, funds, and ethical investing. And now I will hand it over to Alana.
Alana Benson:
Thanks Kim. Hi everyone. Thank you for joining us today. So before we start, I just want to say a couple of things that often get forgotten when we’re talking about investing. So first, investing usually comes second to some other goals. If you’re having a hard time paying for necessities or you don’t have an emergency fund, it’s really important to focus on those things before we even start worrying about investing. Second, instead of scrimping, try to increase your income. So I didn’t start investing until I was in my late 20s, and that’s because one, I didn’t work at NerdWallet yet, so I literally didn’t know anything. And two, I was making around $25,000 a year, so I didn’t have much expendable income. And when you don’t have extra income, it’s really hard to prioritize investing and it just might not even be a good idea to do that.
When I started making more money, it was suddenly a lot more possible for me to invest for retirement. So if it’s possible for you and you want to be investing more, look for jobs that will pay you more or look into side hustles, but cutting back on your streaming services probably will not save you enough money for retirement. And finally, if you don’t have the money to invest now, that’s totally fine. Some people have serious money anxieties and others just don’t have the cash. Whatever your reason is, don’t stress too much about it. Just keep learning and when you’re able to, you can start investing. So why do we invest? What is the point of all this? And the answer is that it’s because we like money and that’s okay. There’s no shame in admitting it, I like money, most people like money. It’s because money isn’t just money. It’s not like Scrooge McDuck diving into pools of money and buying Maseratis. It’s not that.
It’s about not being stressed about your money all the time and it’s about being able to buy everything that you need and some stuff that you want comfortably without having money stress take up all of your energy. Money allows us to thrive instead of just survive and investing helps you make more money than you could ever possibly make just by working at a job. So okay, what actually is investing? This whole process is very strange. Okay. Investing is the process of money that you already have making additional money for you. And this works through what’s called compound interest. Compound interest means that your gains get a little bit bigger every year and that’s also why starting when you’re younger gives you a huge advantage and more money in the long run. So for example, you just start at that little number one in the box up there. Say you buy an investment for $100, if it goes up the average stock market return of 10%, it could then be worth $110, meaning that you’ve made $10.
Then that $10 that you earned also starts earning compound interest on top of the $100 you initially invested. That doesn’t sound like much of a profit, but imagine if you were doing it with way larger amounts of money over a way longer period of time. Now that 10% is an annualized rate, which means that you’re not going to get 10% every single year. In all likelihood, some years you’re going to finish up, some years you’ll finish down. But over the course of decades when you average all that out, you tend to get about 10%. The way you actually start investing is through an investing account. And there’s a couple of different types, but the type of investment account you have is actually really, really important because a lot of them have some pretty significant tax benefits that you want to take advantage of. So you’ve got your 401(k)s and these are offered through your employer. You add money to it and sometimes your employer matches it. So it’s basically free money. If you have a 401(k), you’ll likely choose your investments from a pre-selected list or a fund that will automatically adjust itself over time.
So this means 401(k)s are typically very hands off. IRAs on the other hand are investment accounts that you open up yourself. IRAs can be opened online through brokerages and actually at a lot of large banks, they also do that. So it’s likely you can open up an investment account just through your bank. Unlike with a 401(k), IRAs you’ll have to choose your own investments in those accounts. You may have heard about a thing called a Roth IRA or a Roth 401(k) and it’s good if you know the difference. So with a Roth, you pay taxes on your money now just like any other money that you earn and then the money you have invested inside that account grows tax-free and you can take it out tax-free in retirement. With a traditional IRA or 401(k), the money you contribute today is pre-tax.
So that is you get to deduct it from your income taxes this year. So it’s like a nice little treat this year, but then when you cash it out in retirement, you’ll owe income taxes on it. This is really, really important. I’ve seen a lot of people make this mistake. Your investment account is not an investment, so a Roth IRA, a 401(k), not an investment. So if you have a Roth IRA, that’s great, but that doesn’t mean you’re actually invested in anything. So you fund your investment account and then you buy investments from there. But I’ve heard of people opening a Roth IRA, putting in a bunch of money and then wondering why it didn’t grow over the last 10 years. So you have to purchase investments for your money to actually grow and if you don’t do it, you’ll miss out on all of those years of growth, so very important.
And there’s a couple different types of investments that you can choose from once you open and fund your investment account. So you’ve got stocks, I’m sure everyone’s heard of that, these are shares of ownership in companies and the way you make money from them is if they go up in value and some pay you a cut of the company’s profits on a regular basis. Then you’ve got bonds. This is when you loan money to companies or the government and they pay you interest. Funds, now these are very exciting because they’re basically just baskets of stocks and bonds that you buy all at once. So a fund is still a stock or bond based investment depending on the type of fund that you get. And there’s a lot of different kinds such as index funds or exchange traded funds and mutual funds, but they’re all collections of investments that you buy at one time.
And I think funds are pretty awesome because if you own a stock and that company goes out of business, you lose all of your money. But if you invest in a fund that covers 100 stocks and that same stock goes out of business, your investment is buoyed up by the other 99 companies. So again, all of these investments, stocks, bonds and funds, you buy them from your investment account and then you own them in there. All right, so let’s talk about the stock market, it’s this weird nebulous term that’s hard to understand. But the stock market is just where people buy and sell investments, but now people just trade investments online. So the stock market is made up of several what are called market indexes. Now these are basically just predetermined lists of companies and the performance of that overall list can tell us a lot about the health of the US economy.
So for example, the S&P 500, something you probably have all heard of, that’s just the list of 500 of the largest publicly traded companies in the US and it includes companies like Apple and Amazon. So when we say the stock market is down today, that means that on average most of those companies aren’t doing well. And you can’t invest in the literal stock market, but you can invest in funds that include all the same investments. So these are called index funds because they track a market index. So again, if you have an S&P 500 index fund, it should perform pretty closely to how the S&P 500 itself is actually performing. The S&P 500 goes up 10% a year on average and 6.5% after inflation. And this is just an average, so some years the market goes up more, some years it goes down less, but when done well, investing can potentially mean doubling your money every few years for doing basically nothing, which is my favorite way of earning money, by doing nothing. It’s great.
So let’s talk strategy. This is all about the way that you invest, when you put your money in and when you take your money out. So passive investing is where you buy that S&P 500 index fund and you keep adding money into it until you retire. It’s very boring, but it’s effective. So it can give you that 10% return on average over the long haul, but a lot of people want to make more than that 10%, and they do so by actively buying and selling stocks, crypto options and other high risk investments. They try to predict when they’ll be low, then they buy them and then they turn around and try to sell them when they’re high. So these people are called active traders or day traders. Only 20% of active traders make money over a six-month period. That is not a lot of people.
There have been a lot of studies over the years that show that active investing is a way less lucrative fashion than boring old passive investing with that index fund. Plus active investing is a lot more work, you have to do all kinds of research and you keep an eye on the markets and you can hypothetically earn more by actively trading versus passively earning the same amount as that historical return of 10%. But most people end up making less when they actually try it, and that’s because people are really bad at predicting things. And in order to make money on the overall stock market over the long term, you have to be really good at predicting things all the time. So maybe you make it big on one stock, but the odds of that happening again and again are very low. So let’s put all of this information together, the accounts, the actual investments and the strategy.
Here’s how financial advisors suggest you prioritize your money when you’re starting to invest. So the first thing you want to do is you’re not actually going to invest at all. The first thing is that you’re going to have an emergency fund. So this is money that you won’t actually put in the stock market, and that’s because when your money is invested, its value can change day by day. So say you have $1,000 and you want to use it for an emergency fund, but you invest it, when you have to fix something on your car suddenly, you go to check your money and its value could be $600 instead of $1,000 and that’s not good. If you put it in a high yield savings account, you can access that money at any time without risking its value. Plus right now the interest rates are really high.
So your money could be earning 4 to 5% just by sitting there. So next, you want to get that 401(k) match if it’s available to you because it’s free money. After that, it’s a good idea to look into IRAs. Both IRAs and 401(k)s have what’s called a contribution limit, which is just the maximum amount of money you can put in each of them every year. If you’re able to max out an IRA, then it’s a good call to move back to your 401(k). And the reason you switch around like that is because of the way the tax benefit works. So it’s likely more beneficial to invest in an IRA over a 401(k) if you’ve already gotten your match, if you have to choose between the two. Then if you max out your 401(k), you can move to a standard brokerage account. And this is not a list of everything you have to be doing right now.
You might be thinking, “Whoa, maxing out an IRA is $6,500, I cannot afford that”, and that is totally fine. So I like to picture it as a waterfall. So when you fill up your emergency fund, then you can start working on getting that 401(k) match. Only after that bucket is full should you then move on to investing in an IRA and so on. And wherever you’re at in your bucket filling journey is okay. It’s just nice to know what to do next when you’re ready for it. So we already talked about what accounts to invest from and the investments you can buy, but then do you just start buying a bunch of index funds or stocks or bonds? How do you know how much of each investment to get? And that is all about risk tolerance. And to understand that we have to understand how risk works over time.
If you’re investing for retirement and you’re in your 20s now, that means you have a ton of time for your investments to grow and then drop dramatically and then rise back up. So financial advisors would say you can afford to take on a bit more risk, AKA invest in riskier investments, because you have time for your investments to bounce back. Now, if you’re investing for your retirement and you’re 65, you don’t want to risk all the money you’ve been investing for years and years because you’re going to actually need to use it to pay for stuff in retirement pretty soon, so you want to protect it. And figuring out how much of each investment you should have is a fancy term called asset allocation, but it just means how much of your portfolio is in which of these investments.
And age is just a number, but typically when you’re younger, you may be able to afford to take more risk because you have more time for the stock market highs and lows to even out. So stocks, and okay, remember index funds and mutual funds are often made up of stocks so those count too, but those tend to carry more risk than investments like bonds. And an example of a 20-year-old’s investment portfolio, which includes all of your accounts so your 401(k), your Roth IRA, all of that together, that could be 100% stocks. And that’s fairly risky, but those 20 year olds are not going to retire for a long time. Now, a 65-year-old might have way more bonds because they don’t want to risk all that money they’ve earned over time. And one thing some investors do to mitigate risk is to slowly shift their asset allocation from high risk investments to low risk investments over time.
And again, I’m not a financial advisor and this is not personalized investment advice, but how much of each investment it’s good to have will usually depend on how much risk you are willing to take. And an investment portfolio can be really simple or really complicated. So you could have that one S&P 500 index fund and you purchase it from a Roth IRA, and that’s just all you do. Just if you want to keep it really simple or you can make it more complicated. So maybe you explore several stock-based funds such as international stocks and healthcare stocks and technology stocks, and you could invest in those types through a fund. So instead of buying 30 technology stocks, you just have one technology stock fund, then a small slice in bonds, and then an even smaller slice is crypto or other high risk investments. Though financial advisors have varying opinions on the safety of crypto.
So keep in mind, this is just an example and not necessarily what you should do personally, but it is really helpful to look up asset allocation portfolios through an online brokerage and see what they recommend for your specific age and when you plan on retiring. You can also talk with a financial advisor who can help guide you through those decisions. And investing is great because it can help you earn wealth, which you could spend on a boat, but more than likely one of your biggest investing goals will be retirement. And the sad truth is that in some things like retirement, they just cost so much that you’ll probably never afford them just by putting money in a savings account. And that’s why we say we have to invest for retirement. And the truth is that most people just aren’t saving enough for retirement.
So you’ll probably have a lot of expenses and you have to pay for that in retirement and some of it’s necessary like food or housing or medical care and some of it is travel or bucket list stuff, but you may not be working anymore or at least not as much as you were. And once you factor in inflation, it’s likely that a dollar today will be worth way less when you’re in retirement. And saving for retirement has gotten even more difficult because you can’t necessarily afford to live on social security. Medicare doesn’t always pay for your health needs and pensions aren’t really as common as they used to be. And because of all this, it’s really important to start investing for retirement sooner rather than later.
And if you’re early in your career, it might seem silly to worry about retiring right now, but if you start investing sooner, you actually spend less on retirement than if you start investing later in life overall and that’s because of compound interest. So our retirement calculator shows that if you start putting away $100 per month, that could grow to nearly $400,000 in 35 years. And it’s always good to know how much you should be trying to invest. When you have a long-term goal in mind, you want to know what that number is. So a retirement calculator can be a big help to figure that out, including NerdWallet’s retirement calculator. No shame, I’m going to plug it, but some financial advisors recommend saving 15% of your pre-tax income for retirement. So okay, let’s break that down. What does that look like?
So if you make $100,000 a year, again just because easy math, that would be $15,000 annually that you’re trying to save for retirement. But if you had a 5% match on your 401(k), you’d already be saving $10,000 a year between the $5,000 you make and the $5,000 your employer puts in. And then if you contributed another $5,000 to your Roth IRA, you’d already meet your target goal of saving $15,000 a year for retirement. You should also think about how much you can make during those peak earning years. If you’re younger, what career are you looking to have? You can look up what those wages tend to look like on a site like Glassdoor or ask someone in your life who is in that career path, and maybe do that tactfully because you’re asking about money. But figuring out what you want to be when you grow up may not be something you want to think about right now.
But to be honest, I studied English in college and no one told me about my job prospects. I figured that I would have to write a super famous book or be a teacher and you don’t have to have everything figured out now, but it doesn’t hurt to see how much a potential field could earn and figure out what careers are open to you. And just keep in mind that relationship between your earnings and investing like we talked about in the beginning. And if you’re later in your career, it is harder to take advantage of compound interest, but some of those investment accounts have those catch up contributions that we talked about so you’re able to contribute more after a certain age. Thank you all so much for listening to me talk very fast for a long time, and now I will hand it back over to Kim to talk about taxes. Thanks so much.
Kim Palmer:
Great, thank you so much, Alana. That was great. Someone actually asked in a pre-submitted question, “Why do I have to pay taxes?” Well, here is why. Taxes are used to pay for a lot of different things like clean water, roads, schools, healthcare, and the military. And your tax return is due every year in mid-April to the IRS. We’ll talk a little bit later about what to do if you need an extension, but in general that is the deadline. But first, let’s back up a little bit. When you file taxes, there is so much paperwork. One really important one is the W-4. That is the document that your employer asks you to fill out when you start a new job. And it plays a really big role in telling your employer how much in taxes to take out of each paycheck. It asks you things like your filing status, dependents, how much tax to withhold, and if you get a really big tax bill or a big refund, then you might want to go back and revisit your W-4 just to make sure you’re withholding enough but not too much.
There’s also the W-2, which is a document that your employer sends you to summarize how much in total they took out of your paycheck the previous year, and you’ll need to reference all those numbers when you file your tax return. If you are self-employed or you work a side hustle, then taxes won’t be automatically withheld from your paycheck, and that means you might have to pay something called estimated taxes, which is typically four times a year. In January, you’ll get something called a 1099 form that outlines how much money any company paid you, and then you’ll use that information when you file your return. And then finally, the 1040 is the main form you use when you file taxes, and we’ll drop a link in the chat for more about that. Okay, so you have all of your forms set. How do you actually file your taxes?
You can do it yourself through the IRS. You can use an online tax prep software or you can use a tax professional like an accountant or a tax preparer. If you do it on your own, you can either use paper forms or get access to brand name tax prep software through an IRS service called Free File. But it’s important to know that only people who make below a certain income qualify for the Free File program. If you use tax software like TurboTax, H&R Block or NerdWallet Taxes powered by Column Tax, many of these providers use a Q&A style to help you do your taxes and some even offer paid upgrades that connect you directly to a tax professional. If your finances are really complicated and you want some extra help, then you can also work with a tax preparer such as a certified public accountant.
You do want to make sure to ask them lots of questions and check their credentials before you agree to share your financial information. And you also want to check to see if they have a prepared tax identification number, which is an ID that’s required for anyone who files tax returns for compensation. The US does not have a flat tax system, and that means that portions of your income can be taxed at different rates. There are currently seven tax rates for federal income taxes that run from 10% to 37%. And which tax rate applies to you depends on your income and your filing status. So you might hear people say, “I’m in the 12% bracket” or “I’m in the 22% bracket”, but being in a tax bracket doesn’t mean you pay that tax rate on everything you make. And in reality, people’s income can fall into several different tax brackets depending on how much they make.
Portions or chunks of your income are taxed at different rates and some of those different taxes are then added together. So for example, some of your income could be taxed at a rate of 10%, another chunk could be at 12%. The more you make, the higher the tax rate might be on some of your income. And depending on the state where you pay your income taxes, you might pay a flat rate or a progressive rate similar to the federal structure. A small handful of states have no state income tax. If you want to pay less, you can look for tax breaks. Tax credits and tax deductions are two tools that can help you potentially minimize your tax bill, but they do work in different ways. Tax deductions reduce your taxable income. As a simplified example, a $25,000 tax deduction on $100,000 of taxable income means that only $75,000 of that income will get taxed.
Tax credits directly reduce your tax bill by the value of their credit. So this means if you owe $2,000 in taxes and you’re eligible for a $1,000 tax credit, you’ll end up owing $1,000. Tax credits tend to be more valuable because they have the potential to pack a bigger punch, so you definitely want to try to take all the tax credits you qualify for, and you could even get money back if a credit is refundable. Common tax credits include the earned income tax credit, the child tax credit, the lifetime learning credit, and the American opportunity credit and savers credit.
All right, I alluded to this at the beginning, but what happens if you’re not going to be ready by mid-April? What do you do? If you know you won’t be able to file on time before tax day, you can file for a free extension with the IRS and that gives you until mid-October to file your return. But you want to make sure that at least 90% of what you think you’ll owe in April is covered by an estimated tax payment or your withholdings. Otherwise, the IRS can hit you with a penalty for late payment. The failure to pay penalty is really no joke. It’s 0.5% of your unpaid taxes each month your payment is late plus interest. If you file late and you did not file an extension, you could also get hit with a failure to file penalty, which is 5% of your unpaid taxes each month that your payment is late. There is some good-ish news, if you file late but you don’t owe anything, you won’t get penalized but that doesn’t mean you’re not still obligated to file.
If you don’t, the IRS could file a return on your behalf and you might miss out on a refund if you’re owed one. And if your tax bill is so high that you can’t pay it off, you do have options. You can set up a long-term or short-term payment plan with the IRS.
I know that was a whole lot of information and taxes can seem scary, but we break down lots of popular tax questions and terms on nerdwallet.com. We have some time to address some pre-submitted questions from the audience ranging from about Roth IRAs to the pros and cons of having a financial advisor. And I do want to give a reminder here as we answer these questions that we are not tax or investing advisors. We are writers who focus on these fields and what we say is not investing or tax advice. So with that said, let’s dive into these questions. A question that came to us in an email was: how do you choose between paying off credit card debt and investing in saving for emergencies?
I really love this question because I think it speaks to some of the biggest challenges of personal finance, navigating these choices. And the answer is it’s really up to you. Many financial advisors say that the first step is to create a starter emergency fund, and you can read more in our article that we’ll link to, Should I Pay Off Debt Or Save? And you’ll see most people think about saving $500 to $1,000 first and then after that to consider contributing enough to a workplace retirement plan if they have access to one, and then contributing 3% to 5% of income to an IRA or a Roth IRA. And then financial advisors say people can consider focusing on paying off high interest debt and amp up investing efforts once they have paid that off. And now Alana, I’ll turn over to you. Perhaps you can answer the questions about Roth IRAs.
Alana Benson:
Absolutely. So a couple folks were wondering, before we went over everything, what a Roth IRA is and how does it work and when is it worth it to open one? So we already covered this a little bit, but again, it’s an individual retirement account and it lets you contribute money that you’ve already paid taxes on. So think about when you get your paycheck. That money has already had taxes taken out of it. So once you hit age 59 and a half and you have held the Roth IRA for at least five years, you can withdraw your contributions and any earnings, which is a fancy word for money that you earn from investing, without paying taxes again. And whether it’s worth it is up to you, especially if you’re trying to decide between a Roth IRA and a traditional IRA because it’s about when you pay those taxes and if you have a traditional IRA, you do get that tax break right now.
So that’s a personal decision. But you can also take out money tax-free from your Roth IRA later in life. So if that’s something that you are really trying to parse out, it might be good to talk to a financial advisor because they can help you with that question. We had two other questions. The first one is: how do you calculate how much money to put in your Roth IRA if you make over the maximum amount? So we didn’t actually cover this, so Roth IRAs do have income limits, but there is something called a Backdoor Roth that lets you contribute money first to a traditional IRA, pay taxes on it and then roll that money into a Roth IRA. And then our last question is: what are the pros and cons of having a financial advisor and how do you find one?
This is such a good question. The pros and cons really depend on your situation. The catchall term ‘financial advisor’ is used to describe a wide variety of people and services, including investment managers, financial consultants, financial planners. First and foremost, you always want to verify a financial professional because financial advisor doesn’t require people to be vetted. Certain things like a certified financial planner or a CFP, those actually have a very high level of education and have a certification that you can verify online. So anyone that you are talking about money with, you want to make sure that you are vetting them. And some of these people can just talk to you about your finances and some of them can actually manage your investments for you if you want that. Financial advisors, depending on the kind that you choose, can be pretty expensive. A robo-advisor is like an AI version of a financial advisor.
You just set up an account for one and then they charge you a pretty modest fee. And based on your age and your risk tolerance, it will manage your investments for you. An online financial advisor can offer more services and you can actually talk to a human being, but those do tend to cost a little bit more. And then you could go to an in-person financial advisor, depending on their credentials, that might cost even more, but sometimes it’s really nice to talk to somebody that you know and you can grow that relationship with them over time.
Kim Palmer:
Great. Thank you, Alana. And I think, actually, I can squeeze in one more question that we received. How do taxes work with investment accounts? How much do we set aside so we aren’t surprised by a tax bill? Which is a great question. If you’re selling stocks from a brokerage investment account, then you should be aware of three words, capital gains taxes. Those are the taxes you’ll pay when you sell assets for profit. Assets that you have owned for more than a year are subject to long-term capital gains tax, and the capital gains tax rate is 0%, 15% or 20% on most assets. Capital gains taxes on assets held for a year or less are subject to short-term capital gains. If you regularly trade stocks or other investments, you might be subject to short-term capital gains.
Those profits are taxed as ordinary income based on your tax brackets, which we went over before. Your final tax bill depends on a number of different factors. If you don’t want to be surprised, estimate what you’ll owe using tools such as a tax calculator or IRS worksheets. If needed, consider setting aside enough to cover the tax bill or paying estimated taxes and as always, your specific situation will differ and we are not tax professionals. We hope that you enjoyed this webinar and learned something today. If you’d like to get even more clarity on your finances and continue learning with NerdWallet, consider signing up for an account with us at nerdwallet.com. Thank you so much for joining us.
Sean Pyles: And that’s all we have for this episode. To send the Nerds your money questions, call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. This webinar episode was produced by Alikay Wood, Sheri Gordon, and me. We had editing help from Liz Weston, Sara Brink mixed our audio, and a big thank you to NerdWallet’s editors for all their help. And with that said, until next time, turn the Nerds.
For some people, freelancing is the way they earn their living, relishing the freedom and flexibility of this type of work. For others, it’s a smart way to bring in some income in addition to a salary. Regardless of whether you’re managing your freelance business as a full-time endeavor or a side hustle, one fact is true: You’ve got to pay taxes on your earnings.
In this guide, you’ll learn about the steps to take in your situation, including:
• How do you pay taxes as a freelancer?
• Why are freelance taxes higher?
• What are some ways to reduce taxable income?
• What deductions should freelancers take?
• What should freelancers know about tax refunds?
How Taxes for Freelancers Are Different
The first thing to note is that taxes for freelancers are notably different in two major ways: Freelancers pay a larger percentage of their income (because of self-employment tax), and they’ve got to make estimated tax payments every quarter.
What Is Self-Employment Tax?
For the 2023 tax year, self-employment tax is 15.3%. That’s 12.4% for Social Security and 2.9% for Medicare.
That doesn’t mean that’s all that freelancers pay. Self-employment tax is what freelancers pay on top of regular income taxes. The percentage you pay in income taxes depends on what tax bracket you’re in but can range from 10% to 37%.
Why do freelancers pay a self-employment tax? When you’re an employee for a business who receives a W-2 form, your company pays some taxes for you.
But if you’re a freelancer — whether a writer, photographer, dog walker, or consultant — your clients don’t pay any taxes for you, so you’ve got to pick up the slack.
And don’t forget: You may also have to pay state and local taxes, depending on where you live.
What Are Quarterly Taxes?
Most people think of April 15 as the dreaded Tax Day for all Americans, when they have to pay their taxes. But taxes aren’t actually due on April 15: They’re due when you earn the money.
That’s why employers withhold taxes from every paycheck. Tax season is just that special time where the IRS wants you to go over the numbers and make sure the right amount was withheld — and pay up if you actually owe more. (Or, if you overpaid, file your return to claim a refund.)
But since taxes aren’t withheld when freelancers earn revenue from clients, the government expects freelancers to make quarterly tax payments throughout the year.
Freelancers have two options:
1. Pay 100% of the taxes they owed the prior year, split over four payments.
2. Pay 90% of the taxes they’ll owe for the current year, split over four payments.
Note that these percentages may be different if you’re a farmer, fisherman, or high-income earner.
Estimated taxes are among the most complicated parts of being a freelancer, and you can face underpayment penalties if you don’t send Uncle Sam your fair share throughout the years.
You can check out the IRS’s guidelines for estimated taxes , but a tax professional may be worth the cost if you’re confused.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
Paying Taxes as a Freelancer
Now that you understand that freelancers must pay more in taxes and that they need to keep track of more tax deadlines, consider the actual process for freelancer tax filing.
Here’s how to pay freelance taxes in five steps.
1. Determine If You Have to Pay Freelancer Income Tax
First and foremost, it’s a good idea to make sure you actually have to pay freelancer taxes. If you fit the bill of the IRS’s definition of an independent contractor, you’ll have to file as a freelancer and will be subject to self-employment taxes.
The IRS says you’re an independent contractor “if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”
It’s a rather broad designation and might fit traditional freelance gigs like writers and graphic designers, but it can also apply to app-based workers, like drivers for Uber and Lyft, and even doctors, lawyers, and veterinarians.
Even if you receive a W-2 from an employer but made other revenue on the side, you’re still subject to freelancer income taxes — and must make estimated payments on that income.
2. Calculate How Much You Earned
As a freelancer, you may receive 1099-NECs from clients for the work you do, detailing just how much money you made from them (as long as you made $600 or more).
Even if you don’t receive a 1099, you still have to report any income you made on your tax return. This means paying taxes if you are paid on Venmo or another platform versus by check or a direct deposit.
If you don’t declare the income, you’re committing tax fraud — and the IRS can find out during an audit.
You may want to use a tax preparation checklist to help you organize these materials. You might start by compiling all your 1099-NECs and any other income forms, including 1099-INTs, 1099-Ks, 1099-MISCs, and W-2s, and then input them on your tax return or into your tax software. If you have additional income not represented by any forms, you’ll be able to report that as well.
3. Compile Your Business Expenses
As a freelancer, you can deduct genuine business expenses from your taxable income. The more expenses you have, the lower your adjusted gross income — and the less you have to pay in taxes.
These are called tax deductions. Many tax filers choose to take the standard deduction: $13,850 for single people or married individuals filing separately and $27,700 for married couples filing jointly. However, freelancers with a lot of business expenses might earn a larger deduction by itemizing all their business expense deductions.
Common Tax Deductions for Freelancers
Business expenses can vary significantly depending on the kind of work you do, but you may be able to to use some of these freelancer tax deductions, like:
• A portion of your rent or mortgage (your home office deduction)
• Phone and internet bills
• Any computer and software expenses
• Automotive expenses, including miles on your car when used for business (and only for business)
• Office supplies
• Travel expenses
• Marketing and advertising expenses
• Continuing education
Freelancers may also be able to take the qualified business income deduction and self-employment tax deduction.
Other Tax Deductions and Tax Credits
Business expenses may apply to freelancers specifically, but independent contractors can take advantage of other common tax deductions and credits.
Other common tax deductions include mortgage interest payments, charitable contributions, student loan interest payments, and the state and local tax deduction.
Tax credits are also a useful tax tool and can greatly reduce your tax bill as a freelancer. Some popular tax credits include the child tax credit, Earned Income Tax Credit, and electric vehicle tax credit.
Recommended: Fastest Ways to Get Your Tax Refund
4. Account for Estimated Payments
If you made estimated tax payments the previous year, don’t forget to apply those to your tax form when filing. After all, if you’ve handed over a chunk of change to the IRS already, you’ll want credit for it.
You’ll add your total payments to line 26 on Form 1040 if filling out the form yourself, but most tax software and accountants should prompt you for this information.
5. File and Calculate Estimated Payments
The last step in how to pay freelance taxes: You’re now ready to complete your forms, and send in your tax return and any payments that you owe. And it’s not necessarily just federal taxes that are needed for freelancer tax filing: Depending on where you live, you may owe state, local, and school district income taxes as well.
After filing, surprise: You’re not done yet. You’ll also need to estimate taxes for the current year. Your first quarterly payment is due on Tax Day in April.
If you’re working with an accountant, they can help you calculate how much you’ll likely owe and print out vouchers for you to mail in with your payments. If you wind up making significantly more or less throughout the year, you can adjust your estimated payments to match. That’s part of learning how to budget on a fluctuating income.
Freelancer Tax-Filing Tips
Freelancing and taxes can seem complicated. Here are tips to help you save money and hit all your deadlines.
Plan for Retirement as a Freelancer
Reducing your taxable income is helpful when you have to pay significantly more in taxes on your earnings. One way to do this — and prepare for your future — is to open a retirement account and make pre-tax contributions.
You can contribute to a traditional IRA, but there are also retirement plans designed for self-employed individuals, including a SEP IRA and a solo 401(k). It’s worth educating yourself about how these work and contribution limits so you can find the best option for your financial situation and aspirations.
Research Deductions
You may be tempted to take the standard deduction when filing, but if you have a lot of business expenses, you may earn a larger tax break by itemizing. Tax software and accountants generally know all the different types of taxes and guidelines. They can help you find all the tax deductions you qualify for, but it never hurts to do some research on your own.
Stay Organized
Organization is crucial when running your own business — and that holds true at tax time. By organizing your bills and tracking your income throughout the year (even on a daily basis), you should have good records of all your revenue and expenses.
Find record- and receipt-keeping systems that work for you. You may also want to set calendar reminders so you never miss a quarterly tax payment deadline.
Work with a Tax Professional
Freelancer income taxes can be challenging and confusing. If you’re overwhelmed and worried about making a mistake, it may be worth the money to hire an accountant or tax preparer.
Plus, the tax-filing fee may count as a deductible business expense for next year.
Understand Tax Refunds for Freelancers
Know that it is unlikely that you’ll get a tax refund as a freelancer. What often triggers a tax refund is that a full-time employee had too much money withheld for taxes from each paycheck and their overpayment comes back to them. (They can adjust their W-4 employee withholding tax form to avoid this situation in the future.)
But as a freelancer, it is unlikely you are overpaying your taxes, especially if you are tracking your income and paying the appropriate amount of quarterly taxes.
Recommended: Maximizing Your Time and Money
The Takeaway
Taxes can get more complicated if you’re a freelancer. You likely will pay more in taxes (thanks to the self-employment tax), and you’ll probably need to make quarterly estimated payments. It’s wise to regularly track and review your earnings and expenses so you can stay on top of how you are doing. For many freelancers, working with a tax professional is the best path forward.
Also worth noting: As a freelancer, you need several tools to stay organized and run your business, including a bank account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.60% APY on SoFi Checking and Savings.
FAQ
Why is freelance tax so high?
Freelance taxes are higher because they include self-employment tax. This additional 15.3% is what employers traditionally pay on behalf of their employees. In the case of freelancers, they’re both the employer and the employee so they have to cover that amount.
Do I need to declare freelance income?
Yes, you must declare all freelance income. Even if you didn’t make enough to trigger a 1099 from a client — or that client forgot to send you a 1099 — you must report any and all income to the IRS.
What happens if you don’t file freelance taxes?
If you don’t make quarterly tax payments as a freelancer, you could be subject to underpayment penalties when you go to file. If you don’t pay at all, you’ll be subject to Failure to File and Failure to Pay penalties. You’ll owe interest on top of the fines — and eventually could face jail time if you don’t pay.
Can freelancers pay taxes annually?
While freelancers must file taxes annually like everybody else, they are usually required to make quarterly estimated taxes since no taxes are being withheld from their payments throughout the year.
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Home » Make Money » What is Stan Store?
Written By:
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Updated: January 9, 2024
6 Min Read
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Initially, when my wife introduced me to Stan Store, I wasn’t impressed.
It seemed illogical to pay $30 a month for software that just offered a basic sales page, especially without any integrated email service provider.
This was a stark contrast to my experience with platforms like ConvertKit, where I started with a free account until my subscriber count grew large enough where I had to pay.
As I spent more time with Stan Store, my perspective began to shift. I realized that for someone completely new to online marketing, who might be overwhelmed by the complexities of building and creating a landing or sales page, Stan Store could actually make a lot of sense.
It’s tailored for beginners, offering them a straightforward entry point into the world of digital marketing.
Who is Stan Store For?
So, who’s going to love Stan Store? Pretty much anyone aiming to make a buck online through digital products or services. If you’re like me, trying to turn those ‘link in bio’ clicks into actual sales, then Stan Store is your go-to.
Let me break it down for you. Stan Store is a hit with a wide range of creators and businesses, but from my experience, it’s a total game-changer for:
Content Creators, Influencers, Micro-influencers, and UGC Creators
Instagrammers, TikTokers, YouTubers, X’rs
Online Coaches, Mentors, and Teachers
Digital Product Creators (Etsy, you’ve got competition)
Social Media Managers and Content Managers
Designers, Freelancers, and Small Digital Businesses
And hey, even if you’re in the business of selling physical goods, Stan Store can be a killer tool for growing your email list or hosting online events.
Just a heads up though – selling physical products directly through Stan Store isn’t on the table just yet.
How Does Stan Store Work?
Picture this: I’m on TikTok or Instagram Stories, chatting about my latest digital product – let’s say it’s an eBook or a PDF.
In the past, I’d direct my followers to the ‘link in my bio’, which would then send them off to another site, like my website. There, they’d have to play detective to find the product I was talking about, or sit through endless page loads.
But with Stan Store, things get a whole lot smoother. The ‘link in my bio’ is now the store itself. Followers can hit that link, buy what they want right there and then, without being shunted off to a different site.
The best part? They can hop right back to Instagram or TikTok without feeling like they ever left. It’s all about keeping it simple and seamless – and that’s what Stan Store nails perfectly.
Here’s a screenshot of my wife’s personal Stan Store:
We’re still not a big fan of their email signup process so for now our opt-in page (squeeze page) is hosted on Kajabi.
But my wife is selling our Digital Product Quickstart Guide on Stan Store. Here’s how the sales page looks:
Behind the scenes of our sales page is a payment processor and the ability to deliver the digital product with ease. That’s what makes Stan Store so attractive. You can literally start selling your very own digital product in a matter of minutes.
Why Stan Store Stands Out
What truly sets Stan Store apart is its efficiency – you can begin selling your own digital products in just a matter of minutes.
Stan Store Features Overview
Stan Store is packed with features designed to make the life of a digital creator easier and more profitable. Whether you’re a coach, influencer, or digital product creator, here’s what Stan Store brings to the table:
Mobile & Desktop Optimized Store: Your store looks great and works seamlessly on any device, ensuring a smooth shopping experience for your audience.
Calendar Invites & Bookings Product: Easily manage appointments and bookings directly through your store.
Analytics: Get insights into your store’s performance to make data-driven decisions.
Unlimited Course Products: Offer as many courses as you like, with no restrictions.
1-Tap Checkout: A streamlined checkout process that makes purchasing a breeze for your customers.
Recurring Subscription Products: Ideal for memberships and ongoing services, this feature allows for regular income.
Audience/Newsletter Builder: Grow your audience and keep them engaged with integrated newsletter tools.
Stan Store Plans: Creator vs. Creator Pro
Creator Plan
The Creator plan, priced at $29 per month (or $300 per year with a 20% discount), is an excellent starting point for anyone looking to jumpstart their online business. It includes all the essential tools you need:
Mobile & Desktop Optimized Store
Calendar Invites & Bookings Product
Analytics
Unlimited Course Products
1-Tap Checkout
Recurring Subscription Products
Audience/Newsletter Builder
This plan is perfect for creators who are just beginning to monetize their online presence and need a comprehensive, yet straightforward set of tools to get started.
Creator Pro Plan
For those ready to take their business to the next level, the Creator Pro plan is available at $99 per month (or $948 per year with a 20% discount). It includes everything in the Creator plan, plus advanced features for optimizing conversions and offering more to your customers:
Advanced Pricing & Payment Plans
Discount Codes
Limit Quantity
Payment Plans
Order Bumps & Upsells
Funnel Builder
Affiliate Share Feature
Email Marketing
The Creator Pro plan is tailored for creators who are looking to expand their offerings, optimize their sales process, and engage more deeply with their audience.
Benefits of Using Stan Store
Convenience and Accessibility
The convenience and accessibility of Stan Store are what eventually changed my initial skepticism. The platform allows anyone, regardless of their technical skill, to quickly set up a landing or sales page.
This ease of use is a crucial factor for many users, especially those who lack the time or technical expertise to navigate more complex systems.
Competitive Pricing and Deals
The initial pricing, though seemingly high, is justified by the platform’s simplicity and effectiveness, particularly for its target audience – the absolute beginner in online marketing. The recent addition of an email service provider at a higher tier adds more value, making it a more comprehensive tool.
Drawbacks of Stan Store
Limitations in Product Availability
One of the criticisms I had of Stan Store was its limited range of features. While its simplicity is its strength, it also means that users looking for more advanced features might find Stan Store lacking. This limitation can be a significant drawback for users as their businesses and marketing skills evolve.
Stan Store Alternatives
In the journey of online entrepreneurship, it’s crucial to explore various platforms to see what aligns best with your business needs. While Stan Store has been a solid choice for me, I’ve also had experiences with other platforms worth mentioning:
Shopify: Shopify is a robust platform for creating online stores. It’s feature-rich and offers a lot of flexibility for those looking to build a detailed and extensive online shop.
WooCommerce: Ideal for WordPress users, WooCommerce seamlessly integrates with your existing site, transforming it into a fully functional e-commerce platform. It’s versatile but can be a bit complex, especially for beginners.
Etsy: Etsy is the go-to marketplace for unique, handmade, or vintage items. It’s less about building your own store and more about joining a vibrant, existing marketplace.
Teachable and Thinkific: Both are excellent for creating and selling online courses. They offer a range of tools tailored for educators and coaches, focusing on course creation and student engagement.
Gumroad: Simple and straightforward, Gumroad is perfect for independent creators selling digital products like books, music, or art directly to their audience.
Kajabi: Kajabi is an all-in-one platform offering tools for online courses, marketing, and website building. It’s ideal for those offering educational content and looking for a comprehensive solution.
Comparison Table: Stan Store vs. Alternatives
Feature/Platform
Stan Store
Shopify
WooCommerce
Etsy
Teachable/Thinkific
Gumroad
Kajabi
Customization
Moderate
High
High
Low
Moderate
Low
High
Ease of Use
High
Moderate
Moderate
High
High
High
Moderate
Target Audience
Creators
General Retail
WordPress Users
Artisans
Educators
Independent Creators
Educators/Marketers
Product Type
Digital
All Types
All Types
Handmade/Vintage
Courses
Digital Products
Courses/Marketing
Pricing Model
Subscription
Subscription
Free (Plugin)
Transaction Fees
Subscription
Transaction Fees
Subscription
This table gives a quick overview of how Stan Store compares with its alternatives in terms of customization, ease of use, target audience, product type, and pricing model. Each platform has its strengths, and the best choice depends on your specific business needs and goals.
Is Stan Store Worth it?
After diving deep into Stan Store and comparing it with its alternatives, the big question remains: Is Stan Store worth it? Based on my experience and the insights I’ve gathered, my answer leans towards a yes, especially for a specific audience.
Stan Store stands out for its sheer simplicity and focus on digital content creators. If you’re just starting out or find yourself overwhelmed by the complexities of more advanced platforms, Stan Store offers a welcoming and straightforward path. The ease of setting up a sales or landing page, combined with the platform’s focus on digital products, makes it an attractive option for creators who want to monetize their content without the hassle.
The pricing, initially a point of skepticism for me, actually makes sense when you consider the target audience and the features offered. For beginners and those not ready to navigate the complexities of platforms like Shopify or WooCommerce, Stan Store’s $29 monthly fee for the Creator plan is a reasonable investment.
And for those looking to scale up, the Creator Pro plan, despite its higher price, brings in advanced features that could justify the cost as your business grows. If you’re not sure Stan Store is a good fit, the 14-day free trial might be exactly what you need.
Bottom Line – Stan Store Honest Review
In conclusion, while Stan Store might not be the one-size-fits-all solution for every online entrepreneur, it certainly has carved out its niche. It’s a platform that understands and caters to the needs of digital content creators, making it a worthwhile consideration for those in its target demographic.
As with any tool, it’s about finding the right fit for your specific needs, and for many creators, Stan Store could be just that.
To try Stan Store for free, click here for a 14-day trial.
FAQ – FAQs- Stan Store Review
Stan Store is best suited for digital content creators, including online coaches, influencers, micro-influencers, UGC creators, and digital product creators. It’s also a great fit for anyone looking to streamline their ‘link in bio’ to convert followers into customers.
Stan Store seamlessly integrates with social media platforms like Instagram and TikTok. The integration allows creators to direct their social media audience straight to their Stan Store via a ‘link in bio’, facilitating immediate purchases without leaving the social media app.
Stan Store is designed with simplicity in mind, making it extremely user-friendly for beginners. The platform’s intuitive interface allows for easy navigation and quick setup, even for those with little to no technical background.
Stan Store has two pricing plans: the Creator Plan at $29 per month or $300 annually, and the Creator Pro Plan at $99 per month or $948 annually, with each plan catering to different levels of business needs.
About the Author
Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.
Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.
While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.
Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.
All written content on this site is for information purposes only. Opinions expressed herein are solely those of AWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.
All third party trademarks, including logos and icons, referenced in this website, are the property of their respective owners. Unless otherwise indicated, the use of third party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between Good Financial Cents® and the owners of those trademarks. Any reference in this website to third party trademarks is to identify the corresponding third party goods and/or services.
Looking to learn the best ways to make money while you sleep? Do you ever feel worn out from your regular routine and tired of struggling to manage your money? Just picture being able to earn money even when you’re sleeping, without having to work long hours. In this article, I will show you 19…
Looking to learn the best ways to make money while you sleep?
Do you ever feel worn out from your regular routine and tired of struggling to manage your money? Just picture being able to earn money even when you’re sleeping, without having to work long hours.
In this article, I will show you 19 ways to help you reach financial freedom by earning passive income, such as while you sleep.
Having different ways to make money might seem like something crazy, but with the right plan and some hard work, it can actually happen.
In fact, I earn income all the time while I am sleeping and I love it. Now, that doesn’t mean that it’s easy. Some of the ways below will be harder than others, and they may take up a lot of time still. But, you may be able to earn money throughout the day from the hard work that you put in.
Key Takeaways
There are many ways to make money while you sleep, such as by blogging, selling digital products on Etsy, renting out storage space or real estate, putting your money in a high yield savings account, earning dividends, and more.
Some are easier to start than others – so make sure to think about the pros and cons, such as how much time it may take you or how much money you will need to start (your minimum investment!).
19 Best Ways To Make Money While You Sleep
Below are 19 ways to make money while you’re asleep.
1. Blogging
My favorite way to make money while I’m sleeping is by blogging, and it is a great way to make passive income while you sleep. I have been blogging for many years now (since I started Making Sense of Cents, I’ve made more than $5,000,000 from my blog), and I am able to work and earn money while I am asleep, such as by selling digital products, display advertising, and through affiliate marketing.
This is because readers read my blog posts throughout the day and night, even when I am not working. I have blog posts and advertising on my site, for example, that earn me income throughout the day.
So, what is a blog? A blog is like the article you’re reading now, written and published on a website. It’s basically a collection of written content. You can start a blog about many different topics, such as finance (like my blog!), recipes, family, health, wellness, pets, sports, outdoors, travel, and more.
Other similar ways to make money in your sleep include starting a podcast or a social media account, such as on TikTok or Instagram.
Recommended reading: The 25 Most-Asked Blogging Questions To Get You Started Today
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Want to see how I built a $5,000,000 blog?
In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.
2. Affiliate marketing
If you want to learn how to make money overnight (such as when you’re sleeping), then my absolute favorite way is affiliate marketing.
This is one of the main ways I make money on my blog, but you don’t need a blog to do affiliate marketing either. You can do affiliate marketing on Instagram, Facebook, Pinterest, an email list, and more.
Affiliate marketing is when you share products or services from other companies with readers, subscribers, or people that you know. When someone buys through your referral link, you get a commission and earn some money from the company.
Here’s an example: Let’s say you write about a book on your blog and provide a link to it. If someone buys that book through your referral link, you get a commission.
You’ve probably bought things through affiliate marketing many, many times over the years. I definitely have!
Recommended reading: Affiliate Marketing Tips For Bloggers – Free eBook
3. Selling printables
Making and selling printables is another good way to make money without much active effort.
Printables are digital items that people can download and print at home. They can be things like games for a bridal shower, checklists for grocery shopping, planners for managing budgets, invitations, coloring pages, quotes designed to be printed and hung on walls, and more.
I buy printables all the time, and so do other people. In fact, I bought a printable the other day for my daughter – one that would help her learn the alphabet that I could print out at home for her.
Making printables can be a passive way to earn money. You only need to make one digital file for each product, and you can sell it as many times as you want. All you need is a laptop or computer and an internet connection, which makes it a low cost way to start a business.
Recommended reading: How I Make Money Selling Printables On Etsy
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
4. Investing in real estate
Investing in real estate is a popular way to make passive cash flow while you sleep.
By purchasing rental properties, you can earn a steady flow of rental income from tenants and guests. Also, your property’s value will most likely appreciate over time, which can increase your net worth.
You can invest in residential properties, commercial real estate, short-term rentals (such as starting an Airbnb), REITs (real estate investment trusts), and more. There are pros and cons of each, so you will want to think about that before you get started.
Recommended reading:
5. Starting a YouTube channel
Starting a YouTube channel is another way to make money while you sleep. This is because you can add affiliate links to your videos, generate ad revenue, form brand sponsorships, and sell products within videos as well.
You’ll need to create videos that entertain, educate, or inform viewers, and get as many views to your videos as you can (for the most part, more page views usually does mean more income).
As your YouTube content becomes more popular, you will earn passive income from past videos while working on new content.
Recommended reading: How I Grew From 0 Subscribers To Over $100,000 On YouTube In Less Than One Year
6. Dropshipping
Dropshipping is a type of business where you sell items on an online store, but you don’t do the shipping. Instead, you have a supplier that does the shipping for you.
So, this means that you don’t need to keep any products in stock yourself.
That doesn’t mean that this is easy, though – you have to find trustworthy suppliers and make sure your customers get their orders on time. You will also need to create a website, find a way to differentiate yourself from other dropshippers, take pictures of the items you are selling, answer customer questions, and find ways to grow your store.
The types of items that you can sell in a dropshipping store include clothing, electronics, home decor, pet supplies, luggage, stationary, craft supplies, books, and more.
7. Online courses
I have made over $2,000,000 from selling courses over the years – courses that I have personally created.
Making and selling online courses is a great way to earn money at any time of the day – even while sleeping.
Some examples of courses that can be created include:
Parenting and family
Health and wellness
Woodworking
Dog training
Standardized tests preparation
Playing the guitar
Teaching a language
Traveling
Painting
Cooking
And so much more!
I have taken courses on all sorts of topics over the years, such as baby sleep classes, personal finance, credit card rewards, and so much more.
Creating an online course is one of the fastest ways to use your time, increase your earnings, and help more people.
Recommended reading: How I’ve Made Over $1,000,000 From My First Course Without a Big Launch
8. High yield savings accounts
A high yield bank account is a low-risk method to make extra cash while you sleep.
These types of savings accounts earn a higher interest rate than a regular savings account, so your money grows faster.
You will want to make sure that you pick a trustworthy bank and check the interest rates regularly because they can go up or down. Some people move their money into high yield savings accounts often so that they can get the highest interest rates.
Remember, these accounts usually over the long run have lower interest rates compared to stocks or real estate, but they give you a stable and secure way to earn money.
I personally use Marcus by Goldman Sachs as they have a very high rate. You can get up to 5.40% at the time of this writing through a referral link bonus. According to this high yield savings account calculator, if you have $10,000 saved, you could earn $540 with a high yield savings account in a year. Whereas with normal banks, your earnings would only be $46.
9. Dividends
Buying stocks that pay dividends is another way to earn money while sleeping.
When you invest in these stocks, you get a portion of the company’s earnings on a regular basis.
Here’s how dividends work: If you have shares of a company that gives you money because you own them, that’s called a dividend. So, if you own 10 shares of Company XYZ, and they give you $5 in dividends every year, you’ll get $50 in total for that year. Usually, companies give out dividends four times a year. In the example, the $5 they give you every year will likely be divided into $1.25 for each quarter (four times a year).
Recommended reading: What Are Dividends & How Do They Work? A Beginner’s Guide
10. Rent out your garage
If you have extra land or space in your home that you’re not using, you can make money by letting other people use it for storage.
You can rent storage space for things like cars, boats, boxes, and more. This could be your garage, driveway, closet, basement, attic, or even just a shelf.
A website where you can list your storage space is Neighbor. On this site, you can make between $100 and $400 or more every month. How much you earn depends on how much people in your area want to rent and what kind of space you’re renting out.
Recommended reading: Neighbor Review: Make Money Renting Your Storage Space
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You can use this website to list your unused space for rent and make up to $15,000 per year by doing so. With Neighbor, you can rent out your garage, driveway, basement, parking lot, shed, warehouse, carport, attic, street parking, or even a closet.
11. Hosting webinars
Webinars are like online classes or workshops about specific subjects (I’ve included a list below of some examples). If you’re an expert in something, you can record a webinar and charge people to attend or sell products and services related to the topic during the webinar.
You can also record your webinars and let people watch them whenever they want, which can bring in money while you are sleeping or on vacation.
For example, you could host a webinar about:
Starting an e-commerce store – Teach participants the ins and outs of setting up and running a successful online store.
Digital marketing strategies for small businesses – You could share online marketing techniques to help businesses grow their online presence, such as tips for TikTok, Instagram, Pinterest, Google SEO, and more.
Stock market investing for beginners – You could share advice and tips for newbies in the world of stocks, mutual funds, index funds, bonds, S&P, and investment portfolios.
How to make money with affiliate marketing – You could teach the strategies behind successful affiliate marketing sites.
How to invest in fine wine – Or, any other type of investment! If there is something specialized that you invest in that is different from normal, you may be able to generate interest in your webinar.
And so much more.
12. Peer-to-peer lending
Peer-to-peer (P2P) lending is when you lend money to people or businesses who need loans, and they pay you back with interest.
Websites like LendingClub and Prosper let you spread out your money to lots of borrowers, which lowers the risk if someone can’t pay you back.
As borrowers make their payments, you get a part of the interest, which adds to your passive income streams that you can make without working.
With a peer-to-peer lending site, people can borrow money from a group of lenders like you and me, rather than from a traditional financial institution like a bank. People use peer-to-peer lending sites for all sorts of reasons such as debt consolidation, home improvement, small business financing, investment opportunities, and more.
13. Selling stock images and graphics
If you like taking pictures, you can make money in your sleep by selling stock images on websites like Shutterstock, Getty Images, or Adobe Stock.
People buy stock images for all sorts of reasons, such as to put on their website, within articles and blog posts, on social media, and more. I buy stock images all the time because they can help to make a blog post more enjoyable to read (you can find several stock images within this blog post, in fact).
A great thing about stock content websites is that they can bring in money even when you’re not actively working. You take pictures, put them on the site, and they can keep making money for a long time.
Some common types of pictures that you can sell include travel, business, people, food, animals, health, fashion, sports, and more.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
14. Start a membership site
Creating a membership site where people pay a regular fee (such as each month or each year) for special content, resources, or services is a way to make money.
Some examples of membership sites that you can start include:
Stock image library – You can sell a collection of pictures or videos that subscribers can use for their own projects (such as their own business). Subscribers pay for access to this media library. I personally have been paying for a stock photo membership for years, and I think they are amazingly helpful.
Newsletter – Send valuable and special content straight to your subscribers’ email inboxes regularly where you charge a subscription fee for access.
Mastermind groups – You can form small, focused groups of individuals who come together to support and challenge each other in achieving their goals, and you charge a membership fee for participation. I have seen mastermind groups go for anywhere from free to tens of thousands of dollars a year to participate.
Freelance job board – You can start a site where freelancers can find real job listings and opportunities. Members pay for access to these job listings because they want to find real jobs that pay (instead of having to weed through fake ads or low paying ones).
Consulting or coaching services – You can give personalized advice, coaching sessions, or access to a private community for members looking for guidance in a specific area, like life coaching or business consulting.
Fitness membership – You can create a platform with workout plans, meal plans, and wellness tips. Members pay a monthly fee for access to this content.
Digital downloads library – You can create a library of downloadable resources like ebooks, templates, or software. Subscribers gain access by becoming members.
Community forum – You could create a community around a shared interest or hobby where members can engage in discussions, ask questions, and share experiences, and you charge a fee for access.
Online courses membership – You can start a platform where you have courses on a specific subject, like photography, cooking, or digital marketing, where subscribers then pay a monthly fee to access the content.
Keep in mind, the secret to a successful membership site is giving real benefits to your subscribers. So, whether it’s great content, a helpful community, or useful resources, make sure your members feel like they’re getting what they paid for so that they keep their subscription for months and years to come.
15. Sleep studies and mattress testing
Taking part in sleep studies and mattress testing will most likely not be a long-term, reliable source of income, but it can earn you some extra money while you literally sleep.
You can find these by researching local sleep clinics or mattress companies that have paid studies or testing. Many universities also pay for sleep studies, such as the Harvard Division of Sleep Medicine.
The amount of money you can make depends on the specific study or testing, but it can be an interesting way to earn some extra money or get a free mattress for your time.
16. Vending machine business
Running a vending machine business can be a good way to make money, and you can sell different kinds of products. You may be able to earn over $1,000 a month with a well-run vending machine business.
Here are some ideas of what you can sell in a vending machine:
Snacks and drinks:
Chips
Candy
Nuts and seeds
Cookies
Soda
Bottled water
Energy drinks
Juices
Healthy and organic food:
Granola bars
Dried fruits
Nut mixes
Organic snacks
Low-calorie drinks
Hot drinks:
Coffee (regular, decaf, specialty)
Tea
Hot chocolate
Frozen treats:
Ice cream
Frozen yogurt
Popsicles
Fresh food:
Sandwiches (pre-packaged)
Salads (in sealed containers)
Fruit cups
Yogurt parfaits
Personal care and hygiene items:
Tampons and pads
Toothbrushes and toothpaste
Hand sanitizer
Makeup
Vitamins and supplements
First aid kits
Pain relievers
Electronics and accessories:
Phone chargers
Headphones
Power banks
Office and school supplies:
Notebooks
Pens and pencils
Sticky notes
USB drives
Specialized items:
Fishing bait and supplies
Beauty and skincare products
Baby items (diapers, wipes, toys, snacks)
Recommended reading: How I Make $7,000 Monthly With A Vending Machine Business
17. Amazon FBA
Amazon FBA (Fulfillment by Amazon) is where sellers store products in Amazon’s fulfillment centers, and Amazon handles customer shipping, returns, and customer service on the seller’s behalf. By using FBA, you can sell a variety of products without worrying about storing inventory or handling shipping logistics.
You would be finding the products to sell, though. Even if you have no experience selling on Amazon, you can earn money selling household goods, toys, books, electronics, and so on.
If you want to learn more about starting an Amazon business, I recommend signing up for this free training that will teach you how to sell products on Amazon and make $100 to $500 per day.
Recommended reading: How To Work From Home Selling On Amazon FBA
18. Write a book
People can buy books at any time of the day, including while you are sleeping.
Self-publishing online platforms, such as Amazon KDP (Amazon’s Kindle Direct Publishing platform), allow you to reach a broad audience without the need for a traditional publisher.
Writing your own book is a great way to make money from home, and there is probably something helpful that you could write about (even if you think otherwise!). One very popular topic right now is romance novels, in fact.
Recommended reading: How Alyssa is making $200 a DAY in book sales passively
19. Develop and sell an app
If you have technical skills, developing and selling an app can be a way to make money overnight while you are sleeping.
Creating your own app, whether it’s a helpful tool, a fun game, or something else, can help you to make passive income.
Even though it will take some work and money up front, once your app is in the app stores, it can generate revenue no matter the time.
Some ideas for apps that you could create include a budgeting tracker, meal planner, fitness tracker, meditation app, travel itinerary planner, and more.
You will want to do some research, and make sure that there are people who want to use the app that you are thinking about creating, of course. You could start brainstorming ideas by thinking about what kind of app you think could be helpful in your life to have.
Frequently Asked Questions On How To Make Money While You Sleep
Below are answers to common questions on how to make money while you sleep.
What is passive income?
Passive income is money you earn without actively working, and instead, it comes from investments, businesses, or assets that require minimal effort on your part. Now, that doesn’t mean that making passive income is easy, as you will most likely have to put in a lot of work in the beginning to get started. But, it can be well worth it to make money at any time of the day. Passive income is personally my absolute favorite way to make money.
Which businesses make income overnight? What businesses make money while you sleep?
A few businesses that can generate income even when you’re not actively working are online stores, affiliate marketing websites, and selling printables. These businesses run online, making them accessible to customers 24/7 so people can use them.
What did Warren Buffett say about making money while you sleep?
Warren Buffett, a successful investor and businessman, is quoted as saying, “If you don’t find a way to make money while you sleep, you will work until you die.” This goes to show how important it is to find ways to make money without constantly working a regular 9-to-5 job.
What is the best way to make money while you sleep? – Summary
I hope you enjoyed this article on how to make money while sleeping. As you can see, there are many full-time jobs and side hustles to make money while you sleep such as:
Blogging
Affiliate marketing
Selling printables
Investing in real estate
Starting a YouTube channel
Dropshipping
Selling online courses
Putting your money in high yield savings accounts
Dividends
Rent out your garage
Hosting webinars
Peer-to-peer lending
Selling stock images
Start a membership site
Sleep studies and mattress testing
Vending machine business
Amazon FBA
Write a book
Develop and sell an app
Do you want to learn how to make money while you sleep?
Do you want to learn how to find data entry jobs from home? Here’s how you can make money doing data entry at home. If you’re looking for a data entry position, I have all the details for you here. Whether you want to be a full-time or part-time employee, work remotely, or become a freelancer,…
Do you want to learn how to find data entry jobs from home? Here’s how you can make money doing data entry at home.
If you’re looking for a data entry position, I have all the details for you here. Whether you want to be a full-time or part-time employee, work remotely, or become a freelancer, there are many different kinds of data entry jobs that you may be interested in.
In this article, you’ll learn:
What are data entry jobs
How much a data entry clerk makes
Where to find data entry jobs
And more!
Recommended reading: 21 Best Entry Level Work From Home Jobs
What Are Data Entry Jobs?
Data entry jobs are run by data entry clerks, who have many tasks including typing and data transcription. You can find these types of jobs in many different fields, including healthcare, finance, research, and administration.
Data entry is exactly what you’ll be doing – you will be entering data on a computer system.
Data entry jobs include work tasks such as:
Typing data into computer systems
Updating data into databases
Managing data
These jobs require accuracy and being able to handle all kinds of information involving text and numbers.
Other tasks for data entry freelance jobs may include:
Typing
Listening to audio files and transcribing them into written documents
Data transcription
Legal transcription
Data validation (for example, you may be comparing the data to what you have to make sure it was input correctly)
Data organization
Customer service
Your tasks will mainly depend on the job description, as they can vary from company to company.
Recommended reading: 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly
Who is a good fit for this job?
Being a data entry clerk requires:
Attention to detail and data management
Fast typing speed
Communication skills
Ability to work efficiently
Accurate with data
Proficiency with certain data entry software (such as spreadsheets, Google Sheets, Google Docs, Microsoft Word, or Microsoft Office)
The ability to handle sensitive information
Basic computer skills are extremely helpful with data entry work, as everything will be done with a computer (or laptop).
Many people who work in online data entry jobs like how this field typically works alone from home and remote data entry jobs are a possibility as well.
Plus, you can typically get started in this career field not needing many years of experience, as there are many entry level data entry jobs that you can start with no experience. Data entry jobs usually require a high school diploma or equivalent.
How Much Money Can You Make From Data Entry?
The amount of money you make depends on many things including your location, experience, the industry you work in, and how hard the data entry tasks you are being paid to do. Your pay can also depend on your shift (are you working Monday through Friday at a company, or in your spare time at home?), your work location (companies in certain places tend to pay more), your typing speed (the faster you can type, the more you can get done!), and more.
The average data entry salary in the United States is between $25,000-$45,000 per year, with the average hourly rate being about $18 per hour. Some data entry positions pay less and some pay more, of course.
There are benefits of working this type of job as well, such as being able to find flexible jobs where you can work from home, or even while traveling.
15 Best Places To Find Data Entry Jobs From Home
Here are the 15 best places to find data entry jobs from home.
1. FlexJobs
FlexJobs is an online job search platform that lists remote and flexible job opportunities. Every job listed on FlexJobs has been found and checked to make sure it’s not junk, an ad, or a scam. This is why FlexJobs requires people to pay for a subscription to use their site too.
Listings on FlexJobs include positions for remote work, flexible schedules, part-time work, and even freelance opportunities.
To use FlexJobs, you need a paid account to apply for jobs. In the FlexJobs search bar, search for “data entry” and many positions will come up in this field showing you what qualifications are needed, if it’s 100% remote, and what the tasks include.
I did a quick search on FlexJobs, and I found remote data entry jobs, part-time data entry jobs, freelance data entry jobs, and entry-level data entry jobs. There were many companies that were looking to hire for this position within just the last few days, and from many different fields.
Note: Even though there is a cost to use FlexJobs, if you don’t successfully find a job on FlexJobs, you can ask for a refund.
2. Upwork
UpWork is one of the largest freelancing platforms that connects freelancers with clients who need various types of services, such as data entry. UpWork has thousands of jobs available at any time and makes it very easy to search for data entry jobs.
As a freelancer on UpWork, a 10% fee is taken out of any earnings made from UpWork jobs. This is an important thing to think about before finding jobs on UpWork as this fee can add up quickly.
When I searched on Upwork, I found 2,197 Data Entry Specialist jobs posted. Some of the companies hiring for data entry positions on Upwork included Microsoft, Airbnb, Nasdaq, and more.
3. Amazon MTurk
Amazon MTurk is a platform operated by Amazon that connects people and businesses who need help with tasks like data entry. It is a crowdsourcing marketplace where companies can outsource their jobs.
MTurk has jobs not only in data entry, but image or video tagging, content moderation, transcription, and more.
This is how MTurk works:
Search for jobs through Amazon Mturk and click on a job that interests you.
Accept the tasks and follow the instructions for the job.
Submit your work once the job is completed.
Once the company or individual approves your work, your earnings are available.
4. Microworkers
Microworkers is an online platform that connects people to businesses to do small and quick tasks, referred to as “micro-jobs”. These tasks can range from data entry, data validation, website testing, and more.
Freelancers using Microworkers to find jobs so that they can work as little or as much as they want. Your potential for earning is whatever you want it to be, because you can accept as many jobs as you’re able to complete.
To find jobs on Microworkers, click on the “jobs” tab and browse through hundreds of listed tasks. Each task will show different instructions and the time you have to complete the job. The job will also show how much you will earn for finishing the tasks.
5. Clickworker
Clickworker connects businesses with freelancers who are in charge of completing small, quick assignments.
Besides data entry, you can also earn money with Clickworker by answering surveys, doing research, translating, and more.
As a Clickworker, you will get a list of available assignments that you can choose from. The tasks available to you will depend on your skills, education, past work assignments, and any qualification tests you pass.
6. SigTrack
SigTrack is a site dedicated to data entry jobs. Jobs on SigTrack primarily focus on collecting and verifying voter signatures for political campaigns, initiatives, and petitions.
There is plenty of work available on SigTrack with the average hourly rate going from $11-$12 per hour.
You cannot reside in California or Massachusetts to work for SigTrack.
7. Fiverr
Fiverr is an online job marketplace that allows freelancers to list their digital services, including data entry, graphic design, writing, web development, and a lot more.
Companies or small businesses looking for freelancers search Fiverr for help on their projects.
It’s important to note that Fiverr does take a 20% cut of your earnings, so keep that in mind if you search for a job here.
I found 69,727 jobs related to data entry on this site, so competition can be pretty tough. You will have to find a way to stand out if you want to post a listing on Fiverr.
8. Axion Data Entry Services
Axion Data Entry Services is a company that does data entry and data processing for businesses, such as for managing and digitizing their data.
As an employee of the Axion Data Entry Services team, you’ll be evaluated for accuracy and your attention to detail, and you are paid at a flat rate per entry or for each document you enter.
The more skills and qualifications you have, the more you will earn at Axion Data Entry Services.
9. DionData Solutions
DionData Solutions connects data entry specialists to businesses and organizations. DionData Solutions works for clients who need help in managing and digitizing large volumes of data accurately and efficiently.
At DionDate Solutions, data entry specialists work on:
Medical claims
Mailing lists
Surveys
Subscription fulfillments
Enrollment forms
Warranty cards
Product registration cards
Inventories
And more.
10. Capital Typing
Capital Typing is a company that sells services such as data entry, transcription, virtual assistance services, and other admin support roles.
Capital Typing specializes in on-demand and long-term outsourcing solutions to help companies streamline their operations.
Due to the type of business they run, they are in need of data entry workers.
11. We Work Remotely
We Work Remotely is a job board that focuses primarily on remote jobs. This platform is home to the largest remote work opportunity in the world with over 4.5 million visitors.
Many companies hire workers from this site, such as Google, Amazon, and more. So, there are many big companies that list jobs here.
This online platform allows companies to hire remote workers for all kinds of jobs including data entry. Jobs posted include information such as what the company is looking for, what the ideal candidate has as far as qualifications go, salary and benefits, and the steps to apply.
12. Virtual Vocations
Virtual Vocations is a job platform that lists remote and telecommute job opportunities.
This platform is designed to help remote workers find legit online jobs, making it as easy as possible to get started working from home.
Jobs listed on Virtual Vocations list key responsibilities for the job, and required qualifications.
When I looked, Virtual Vocations currently has 7 jobs related to data entry listed.
13. Scribie
Scribie is a transcription and audio captioning service that provides services to businesses and individuals. Scribie specializes in converting audio and video files into written text.
To apply as a Scribie transcriptionist you need to:
Sign up as a Transcriber
Connect your PayPal account
Take a transcription test
Scribie pays $5-$20 per audio hour (Scribie claims that a person can make around $800 a month by working 8 hours each day.). The pay is a little on the lower end, but Scribie does give you automated transcripts, which can save you around 60% of the typing effort.
You’ll simply listen to the audio clips that they give you, compare them to the automated transcription (such as applying context, identifying mistakes, and correcting the automated transcript that they give you). Then, you can get paid.
14. GoTranscript
GoTranscript is a platform that connects businesses with professional data entry specialists. Data entry specialists on GoTranscript work on documents related to the medical, legal, and academic fields.
With a 98% customer satisfaction rate, GoTranscript relies on hiring the best data entry specialists.
They pay up to $0.60 per audio or video minute, with an average earnings of around $150 per month.
15. Working Solutions
Working Solutions is a site that works with independent contractors on jobs related to industries like health and insurance, senior living, fitness, hospitality, and education.
Working Solutions independent contractors’ tasks include things like handling customer care calls, emails, and video chats.
You can often find data entry jobs on this site.
Frequently Asked Questions About Data Entry Jobs
Below are answers to common questions about data entry jobs from home.
Is work-at-home data entry legitimate? Can you really make money doing data entry at home?
Work at home data-entry jobs are legit and can be found quite easily online.
Here are some tips to help you find a legit work at home data entry job.
Use FlexJobs – Since FlexJobs job listings are all curated and checked for accuracy, you’ll have more peace of mind. Companies listing jobs on FlexJobs include Apple, Salesforce, United Healthcare, Dell, Capital One, and many more.
Be cautious – If a job posting makes exaggerated claims about high earnings with little to no effort, it’s likely a red flag. Legit data entry jobs give fair compensation (above minimum wage) for the data entry tasks performed. But, a legitimate company won’t ever pay $10,000 a week or something high like that.
Research the company – You should look for an official website for the company, a physical address, any information you can find on the Better Business Bureau, and even a contact phone number. Scammers generally use generic email addresses and websites that lack information.
Don’t pay thousands to become a data entry clerk – Some companies may ask you to have a data entry certificate. If they ask for this, make sure they aren’t charging you an arm and a leg for it.
Unfortunately, with many work from home careers, there are a lot of scams. But, that doesn’t mean that data entry isn’t real.
There are many places to find the best data entry jobs. But, you still have to be smart!
Which site is best for data entry jobs?
The best sites for data entry freelance jobs include:
FlexJobs
UpWork
Fiverr
We Work Remotely
Job listing sites like the platforms above often are great places to start if you are looking for entry level data entry jobs from home.
Is data entry a hard job to do? Can a beginner do data entry?
Data entry is often an entry-level job and is relatively easy to get started with. If you don’t have trouble with typing accurately and inputting data, then you most likely won’t have a problem with finding work at home data entry jobs.
For most new jobs in data entry, you will want to make sure you include a relevant cover letter and resume. Even if you are brand new to work-from-home data entry jobs, you can still tailor these documents to the company and position so that you can get the job.
Can I do data entry with my phone?
Okay, so I hear this question all the time. And, I get it – being able to work from your phone would be great.
Depending on the job, you can possibly do data entry from your smartphone, but it won’t be nearly as efficient and easy as doing this kind of work on a computer.
The small screen size on your phone makes data entry more challenging, and your typing will be much slower compared to working on a laptop. Plus, some software may not be available on your phone.
If you want to make the most money with stay at home data entry jobs, then it’s probably best to get a laptop or a computer.
Data Entry Jobs From Home – Summary
I hope you enjoyed today’s article on how to find online data entry jobs from home.
Data entry jobs are great for people completely new to this field as you don’t need prior experience to become a data entry specialist.
Plus, with the average salary from $25,000-$45,000, finding a data entry position is a good career path to get started with if you want to work from home and possibly have a flexible schedule.
What’s your best place to find work from home data entry jobs?
Inside: Are you confused about the differences in types of income? This guide will help you understand earned income, passive income, and investment income, and their importance in achieving financial stability. Learn about the different tax implications for each type of income.
Understanding the differences in income types is a vital component of your financial literacy.
Earned, passive, and investment income all play a distinct role in your financial portfolio and tax liabilities.
These types of income are important to grow your wealth.
We will quickly answer the difference, provide examples, and understand the tax implications.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What Is Earned Income?
Earned income is the money you actively work for. You trade your time for money.
This comes in the form of salaries and wages, where you receive a fixed amount of compensation for your role or job. It can also occur as hourly wages in part-time or contractual jobs.
Other forms include tips received in the service industry, bonuses for achieving specific goals, and self-employment income for freelancers, consultants, and small business owners. Any income that directly results from your personal efforts and active participation falls under earned income.
Typically, this is the most common form of income for most people.
Real Life Examples of Earned Income
A supermarket cashier receives an hourly wage.
A financial analyst is being paid for salary.
A freelance graphic designer receiving payment for a recently completed project.
A waitress at a restaurant receives a tip from a satisfied customer.
A real estate agent receives a commission on the sale of a house.
A sales manager at a car dealership receives a bonus for meeting sales targets.
A renowned author receiving an honorarium for delivering a keynote speech at a literature festival.
A hairstylist at a salon receives income from the haircuts and styling services provided.
A fitness coach generating income through personal training sessions.
Any side hustle income is typically earned income.
How Is Active Income Taxed?
Active income, also known as earned income, is subject to income tax at various rates as determined by the IRS’s current tax brackets. Seven tax brackets, ranging from 10% to 37%, are set for individual taxpayers. 1
The tax treatment is wholly dependent on where an individual’s income falls within these brackets. Your employer typically deducts this tax directly from your paycheck, reducing net take-home pay. It’s advisable to understand the tax implications of your earnings to avoid any surprises at tax time.
Use this tax calculator to know your taxes due.
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Role of Passive Income
Passive income refers to money earned that is not directly linked to active efforts or time spent, often described as income one can earn while sleeping, vacationing, or indulging in hobbies.
This kind of income usually demands some sort of initial investment, which could be financial, a substantial time commitment, ingenuity, or a mixture of all. For many, they invested 10k to get started. Examples include writing a book, creating a course, investing in real estate, or running an affiliate marketing program.
Despite the upfront work often required, passive income potentially provides a steady additional revenue stream and financial independence, making it an attractive prospect for many.
Common Forms of Passive Income
Dividends and interest income: Profits made from investments in stocks or bonds often involve receiving dividends or interest.
Rental income: This is earned from renting out property you own, like houses or apartments as a real estate rental.
Royalties: Income from allowing others to use your intellectual or creative properties, such as copyrighted books, music compositions, or patented inventions.
Capital gains: Profits from buying assets like stocks or property for a certain amount and selling them at a higher value.
Product or Course Sales: A small business owner receiving income from a product or sales that they created once and can resell.
Remember, there is still a level of effort involved in managing these streams, even though they are considered passive.
How Is Passive Income Taxed?
The tax liability of passive income can vary based on how the income is generated. 2
In general, how passive income is taxed depends on how the income is earned. The key note is you are not trading your time for money.
Some forms of passive income are subject to self-employment taxes, while others may be taxed at your regular income tax rate. For instance, net rental income, a form of passive income, may attract unique taxation rules.
However, the applicable tax rules can be complex. Therefore, it’s highly recommended to seek advice from a licensed tax professional when managing taxes for passive income.
Insights into Investment Income
Investment income is a distinct financial category mainly composed of profits resulting from various investments. This pathway consists of the strategic acquisition of assets with a prime focus on their long-term appreciation or regular income, potentially in the form of dividends or interest.
Unlike earned income which often demands a substantial time investment, and unlike passive income which may need initial setup, investment income principally necessitates strategic decision-making and periodic performance reviews.
The common form is learning how to invest in the stock market or real estate.
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Examples of Investment Income And Strategies
Dividends: Income received from owning shares of a company. A long-term investment strategy generally works best here.
Bond Interest: Income paid from bonds for lending money to entities. Risk-averse investors often lean towards bonds for steady income.
Capital Gains: Profits from selling investments at a higher price than their purchase. This needs a strategic understanding of market patterns.
Real Estate Investment Trusts (REITs): Income from investing in property-related assets. This strategy may provide steady cash flow with potential growth.
P2P Lending: Returns from lending money through online platforms. The ability to scale and diversify this investment depends on your risk tolerance.
Interest on savings accounts – Money earned on the balance held in your savings account.
All require a strategic approach, balancing risk and rewards, to drive income growth effectively.
Please note, that the successful generation of investment income often requires careful financial decision-making and strategic asset allocation.
Impact of Tax on Investment Income
Taxes on investment income include interest, dividends, and capital gains. However, the rate is usually lower than that for earned income.
Investment income is often taxed at a lower rate than earned income, however, the exact tax rates can depend on an individual’s tax bracket and the holding period of the investment.
In certain circumstances, Investment income can be subject to capital gains taxes, which apply if you sell a stock or other investment at a profit.
For some high-income individuals, Investment income may be subjected to the Net Investment Income Tax (NIIT). The NIIT is an additional 3.8% tax on certain investment income, such as interest, dividends, and capital gains.
Capital gains from the sale of assets (like real estate or a business) are often taxed at a lower rate compared to ordinary income.
Therefore, it’s important to consider these tax implications when shaping your investment strategies. Proper tax planning can help mitigate the impact of taxes on your investment income.
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Major Differences Between Active (Earned) and Passive Income
The primary differences between active (earned) income and passive income revolve around how they are earned and managed.
Active (earned) income requires active, day-to-day involvement in work. For example, a full-time job where you’re on the clock. It’s often less scalable due to time and energy constraints. Earned income is also more prone to risks like job loss or health issues that prevent work. Furthermore, in most regions, earned income tends to fall in higher tax brackets.
Conversely, passive income demands initial setup and some regular review but not daily oversight. Examples include earning royalties from a book you wrote or income from renting properties. This is more scalable because you aren’t exchanging time for money in the same way.
Advantages of Diversifying Your Income Sources
#1 – Achieving Financial Goals with Flexibility
Diversifying your income source adds flexibility to your personal finance strategy, helping you achieve your financial goals effectively. An income diversified across active, passive, and investment income can cushion against financial downturns whilst providing multiple avenues for wealth generation.
An unexpected job loss, for example, maybe less devastating when you have additional income streams to bank on, such as rental income or dividends, providing you with the flexibility to navigate financial bumps. It also allows you to explore unique investment opportunities without undue stress.
Consequently, a multi-faceted income model can be a stepping stone towards financial freedom.
#2 – Stable Financial Standing with Multiple Income Streams
Having multiple income streams provides a buffer that can significantly enhance your financial stability. “You’ll catch more fish with multiple lines in the water,” says Greg McBride, chief financial analyst at Bankrate. 4
If one income source dwindles or disappears, other income streams continue to provide essential financial flow. This duplication shields you from the full brunt of economic or occupational changes, ensuring you maintain your standard of living while working towards your financial goals. Thus, a diverse income portfolio lays a foundation of financial resilience and prosperity.
#3 – Tax Benefits and Deductions: Navigating the Complexities
Income diversification presents an opportunity to mitigate taxes through various benefits and deductions. Depending on your jurisdiction, you may be eligible for specific tax breaks or deductions on passive or investment income. For instance, certain expenses related to generating rental income may be deductible, or long-term capital gains might be taxed at a lower rate.
It’s also noteworthy that certain types of income like qualified dividends or long-term capital gains can offer potential tax advantages over regular income. While tax laws can be complex, a basic understanding of these concepts could be beneficial to reduce your tax obligations.
That said, always consider seeking the help of a tax professional to navigate these intricacies, especially with an S corporation or with a schedule C.
FAQ About Different Types of Income
Earned income and passive income are two distinctly sourced income channels. Earned income is money received as a direct result of work performed or services provided. This includes wages, salaries, tips, and self-employment income.
Passive income, on the other hand, is money earned without active, daily participation. Although it may require initial efforts to set up, its subsequent generation entails minimal direct input. The key difference between the two lies in the level and timing of involvement required to generate them. Passive income gives you more time freedom.
Portfolio income and passive income are often misunderstood as the same. However, the Internal Revenue Service (IRS) distinctly categorizes them. 3
While passive income generally refers to earnings gained without active involvement, portfolio income specifically relates to income derived from investments such as interest, dividends, or capital gains. Although both involve some lack of active participation, their origins, and tax implications are different.
No, investment income and earned income are not the same. The key difference lies in the source: one is actively earned by working, while the other is accrued through investing or letting money work for you.
The variance also manifests in their respective tax treatment by the IRS.
Earned income refers to wages, salaries, bonuses, and other income earned by providing a service or actively participating in a job or business.
On the other hand, investment income is generated from things like dividends, interest, and capital gains from the sale of financial assets such as stocks or bonds.
Diversification is the Key to Types of Income
Choosing the right income channel—earned, passive, or investment income—depends heavily on your financial goals, resources, risk tolerance, and time commitment.
Earned income may provide stable, regular income, but requires active participation.
Passive income, while enticing with its offer of money while you sleep, requires initial effort and savvy management.
Investment income may promise attractive returns, yet it can involve significant risk and demand financial acumen.
Diversifying your income streams could provide economic stability, flexibility, and potential tax benefits.
One wise woman, Teri Ijeoma, once stated, “It is better to make more money than you know what to do with rather than worry about how the taxes work.”
Remember, there’s no one-size-fits-all answer to financial prosperity, but understanding the nuances of various income types is a step in the right direction toward financial literacy and independence.
Now, let’s move to how to become financially independent.
Source
Internal Revenue Service. “IRS provides tax inflation adjustments for tax year 2024.” https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024. Accessed November 20, 2023.
Internal Revenue Service. “Passive Activity and At-Risk Rules.” https://www.irs.gov/pub/irs-pdf/p925.pdf. Accessed November 20, 2023.
Internal Revenue Service. “Publication 550 (2022), Investment Income and Expenses.” https://www.irs.gov/publications/p550. Accessed November 20, 2023.
Bankrate. “23 passive income ideas to help you make money in 2023.” https://www.bankrate.com/investing/passive-income-ideas/. Accessed November 20, 2023.
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