After the TSP, I invest my money in Betterment and Vanguard. I track all of my investments with Personal Capital. I also wrote a short, 2 hour book summarizing this site. You can buy it here.

Check out my review of Lending Club if you’re not familiar with it!


My understanding is that Lending Club profits are taxable. However in the 2011 tax year, I didn’t receive any tax documents from Lending Club. Many other people probably experienced this as well. What’s going on? Here’s the answer:

For all Lending Club notes issued on or after 14 October 2008, Lending Club will issue a 1099-OID IRS tax form to you IF:

Interest Receive + Late Fees – Servicing Fees => $10

But they will only issue a 1099-OID PER NOTE. So if you have $25 invested in 1000 notes, chances are any individual note WILL NOT generate $10 or more in interest and late fees for a single tax year. However, you probably will have much more than $10 in interest payments in your total account for the tax year. Therefore, you won’t receive a 1099-OID from Lending Club, only a year end statement. The year end statement will list the total interest and late fees you received, so you can use that to fill out your tax return.

The way I listed it on my 1040 last year (2011 tax year) was under the 1099 section, where my bank account interest went. I simply created a line item for Lending Club and then listed the total interest I received. That should be enough to cover yourself if you were ever audited.

Lending Club’s official policy statement on taxes is as follows:

Interest and other payments received from your Lending Club Notes may be taxable. Lending Club does not provide tax advice and recommends that you consult your financial or tax advisor.

And here’s an entire Lending Club tax information section if you’d like to know more. Jonathan at My Money Blog had similar ideas earlier this year.

Again, this is just based on my experience. Check with a CPA, CFA, or someone who actually understands US tax law and the special situation Lending Club creates. Don’t rely on blogs for your tax advice!

2 Websites I Use to Achieve Financial Independence Faster

I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.

I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.

Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.

P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.

The best way I know to achieve financial independence is to keep your investments simple, diversified, automatic, and low-cost. Costs eat into your returns like you wouldn't believe! A 1% difference in expense ratios can mean $100,000s lost to fees over a lifetime of investing.

Even if you're a DIY (do-it-yourself) investor like I am, you need to check out Betterment. You can read my full review here, but the bottom line is for only $250 per $100,000 invested (0.25% expense ratio) you get simple, diversified, and automated investing. In addition every account now gets free Tax Loss Harvesting+ features, which should increase returns for the average investor more than the minuscule management fee.

If you're not a DIY investor or are just getting started with investing, then you definitely need to check out Betterment. It's what I recommend to my family and friends who aren't strong investors or don't care to learn about asset allocations, diversification, or rebalancing.

Do I Have to Pay Taxes on my Lending Club Earnings?

What are your thoughts?