Most people talk about passive income like it's a magic solution: do something once, and money just keeps rolling in. But the reality is a lot more complex — especially when it comes to how different types of income are taxed.

What many don't realize is that there’s a huge difference between portfolio income (like dividends or capital gains) and what the IRS truly considers passive income (like rental income). Misunderstanding these terms can lead to overpaying taxes — sometimes by tens of thousands of dollars.

In this breakdown, I walk through how the IRS classifies income, what truly counts as passive, and why some “passive income” strategies are actually active businesses in disguise — and taxed accordingly. That course that teaches you to build a digital product and call it passive? It might actually be a high-tax hustle if you’re not careful.

I also share some practical insights on how to build income streams that are not only sustainable but also tax-efficient. Whether you’re looking at rental properties, investments, digital products, or royalties, understanding how income is taxed is just as important as generating it.

By the end, you'll have a clear understanding of:

What truly counts as passive income
How portfolio income is taxed differently
How to avoid common mistakes in income classification
Legal strategies to reduce your tax burden with smarter planning

This is the kind of foundational knowledge that can transform how you approach financial freedom — not just how you earn, but how much you actually get to keep.

115: 3 Types of 'Passive Income' - Only One Lets You Keep 96%

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