Three Passive Income Streams for pilots

Unlike the W-2 incomes earned from working at an airline, passive income has several tax advantages.

First and foremost,  passive incomes are not subject to Social Security and Medicare taxes.

Passive incomes are rents, royalties, dividends, interest, and short-term and long-term capital gains.

According to Anderson Advisors:

"Passive income is not subject to withholding or Social Security and Medicare taxes. This automatically eliminates the combined 15.3% Social Security and Medicare taxes and amounts to an additional 14 cents of every dollar back in your pocket when the same income is earned passively instead of actively."

Think about that - keeping 14 percent more of your hard-earned income!

Three smart moves for passive income are:

• Dividends
• Options
• Real Estate

 While once wildly popular with investors, there are still some companies that pay dividends to their shareholders. While taxed, these dividends are taxed at a lower rate than many active income rates.

Options are a way to sell someone the right to buy your shares of stock at a price higher than you paid it. Income generated from options is considered short-term gains, which is taxed at an even lower rate than dividends.

Real Estate investing also creates capital gains income. It’s an industry where investors can enter either as an active buyer of rental property, or as a share-holder of a REIT, a real estate investment trust.

In the end, ideal investments are those you can keep more of your money. Passive income offers investors a preferential tax rate that is much more attractive than active income.