We did it! We made it through 2018 pretty much unscathed. While net worth took a huge hit this month, dividend income finished out the year strong. It’s hard to end a year with only negatives, so I’ve also compiled some highlights of 2018 year end successes as well.
December Dividend Income
This month I received $1,734.60 in dividend income! On average, I was paid $29.90from 58 different companies!! This month’s dividend income is a great59.58% increaseover December 2107.
That’s$647.46more dividend income than last December!
Dividend Income - December 2018
Here is a chart of my passive dividend income progress over the last 4 years.
The dividend portfolio has been updated.
December’s dividend income covers a lot. Myutilities, groceries, rental property mortgage, internet, cell phone and car insurance for the month. Thanks dividends!
December Dividend Growth (Dividend Increases)
Here are the realized dividend increases I received this month. Dividend growth is a very important part of my early retirement and this is clearly one of my favorite reports to give… especially this month! This December I received 11 dividend increases! Ever better, 6 of those dividend increases were over 10%!
Dividend Increases - December 2018
December’s dividend increase adds$86.04 in annual dividend income! It’s always wonderful to receive a raise and I’m thrilled with the amount.
2018 Dividend Income Wrap-up
2018 was a fantastic year for my dividend income. The growth has been remarkable thanks to my 401k. It was a huge advantage having the ability to invest the money myself – and specifically into dividend stocks.
This year I received a total of $13,057.19 in dividend income! This is a gigantic increase of 126.75% over 2017 total income of $5,758.37. I was able to double my 2017 total dividend income again this year!
I think it’s important to mention that this large increase was possible only because I added A LOT of capital this year and last.
Net Worth
Ouch… net worth took a huge hit this month!
Let’s do the numbers…
Cash
Cash was reduced a little this month as I added $3,500 into my taxable account (which is why it was only down 5.5% instead of 8%). Other than that, everything is still moving as scheduled. I have made plans to take some cash to fully fund out ROTHs and add some extra ammo to the taxable account.
I’m still sitting on a bunch of cash. The money is held in a high yielding money market account with thecash now earning 2.45%. I’m continuing to keep this powder dry while waiting for some better deals.
Real Estate
As I mentioned last month, our tenant has been a little messy in our house. Our property manager has done a follow-up walk through on our home and everything was cleaned and made tidy. This is great news, and we would like to keep them there since they always pay on time!
While I am in the market to find some new rental property, we haven’t had any luck finding any that match our criteria. Everything is way too expensive, so we will just continue to watch and wait.
My wife and I have discussed selling our home while the market is high and, hopefully, building our own house. Based on our research, it won’t be possible for us to buy a lot anywhere close to our current location to downsize as land is so expensive. Finding land further out is an option, however, some extreme life planning will have to take place before that can happen. I will continue to do research and report back what we come up with.
2018 Net Worth Wrap-up
In an effort to end the year with some positive net worth news, I thought I would do a year over year comparison from 2017. While I track my net worth every month, this exercise has been enlightening. Frankly, I thought the numbers would be a bit better, but there is still plenty to celebrate.
As you can see, my net worth increased by a little over $50,000 last year. Half of the increase came from paying down mortgages while the other half came from investment increases. It’s interesting what a couple of down months can do to yearly investment gains. I’m sure glad I don’t grade my success or failure based on my yearly portfolio gains. I am much more interested in increasing dividend income through strong, stable dividend paying stocks.
Wrap-up
So there you go, 2018 was wonderful and kinda disappointing at the same time. I will obviously continue the same path of dividend investing and hopefully come up with a viable plan to downsize our primary home, free up some cash and cut our monthly expenses. This will be key for me to retire early. Whatever 2019 brings, I will remember to be thankful for my family, health and the wealth we have accumulated thus far.
FAQs
Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return but is not taxable.
What does the IRS consider income? ›
Income can be money, property, goods or services. Even if you don't receive a form reporting income, you should report it on your tax return. Income is taxable when you receive it, even if you don't cash it or use it right away. It's considered your income even if it's paid to someone else on your behalf.
Are rebates taxable in the IRS? ›
IRS says California, most state tax rebates aren't considered taxable income. Taxpayers in more than 20 states who received tax rebates last year got some guidance from the IRS after the agency had asked them to hold off on filing their tax returns.
How do I report investment income? ›
You'll have to file a Schedule D form if you realized any capital gains or losses from your investments in taxable accounts. That is, if you sold an asset in a taxable account, you'll need to file. Investments include stocks, ETFs, mutual funds, bonds, options, real estate, futures, cryptocurrency and more.
What does the IRS consider non taxable income? ›
Examples of items that aren't earned income include interest and dividends, pensions and annuities, Social Security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care ...
What happens if you don't report some income on taxes? ›
An accuracy-related penalty applies if you underpay the tax required to be shown on your return. Underpayment may happen if you don't report all your income or you claim deductions or credits for which you don't qualify.
Are dividends considered earned income? ›
Unearned Income. Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.
Are interest and dividends considered earned income? ›
Interest and dividend income are the most common types of unearned income. Money received this way is unearned income, and the tax paid on it is considered an unearned income tax.
What is not counted as income? ›
Nontaxable income won't be taxed, whether or not you enter it on your tax return. The following items are deemed nontaxable by the IRS: Inheritances, gifts and bequests. Cash rebates on items you purchase from a retailer, manufacturer or dealer.
Can I get a tax refund if my only income is Social Security? ›
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.
So as long as you earned income, there is no minimum to file taxes in California. It is a good idea to talk with a tax professional to determine your filing status and whether you are required to file or could benefit from doing so anyway.
Are credit card rewards considered income? ›
Credit card rewards you earn by making purchases with the card aren't considered income and are not taxable. This includes rewards miles, points and cash back. The IRS treats these types of credit card rewards as rebates or discounts on your purchases, rather than income.
How much tax will I pay on my dividends? ›
Current Dividend Tax Bands
The dividend tax rates for 2021/22 tax year are: 7.5% (basic), 32.5% (higher) and 38.1% (additional).
What happens if you don't report investment income? ›
Often, the IRS will recalculate your tax return by including the missing income and determining the amount of tax they think that you owe. This can include penalties and interest.
Do you pay taxes on dividends? ›
Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates.
Do you include non taxable income in gross income? ›
Gross income includes all income you receive that isn't explicitly exempt from taxation under the Internal Revenue Code (IRC). Taxable income is the portion of your gross income that's actually subject to taxation. Allowable deductions are subtracted from gross income to arrive at your taxable income.
Where does nontaxable income go on 1040? ›
Filling out Form 1040
Tax-exempt interest and income is entered on Line 18. Read our guide to entering the tax-exempt income, non-deductible expenses, distributions, and other items from Schedule K-1 (Form 1065) into the TaxSlayer Pro program.
What is untaxed income not reported? ›
Untaxed income is income not reported on a tax return, such as: Alimony. Child support. Untaxed portions of pensions. Housing, food, and other allowances paid to military, clergy, and others, including cash and cash value.
Where is non-taxable income on W2? ›
Paid Non-Taxable Income Earnings Included during the year. Non-taxable items would show up on an employee's pay stub, but not in the employee's W-2, as they are not taxable to the employee.
