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What is the investment expenses deduction

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What is the investment expenses deduction

Postby guest » Wed Mar 02, 2016 9:55 pm

If you have investments, such as stocks, bonds, IRAs, or other income-producing ventures, you might be able to deduct some of your miscellaneous investment expenses. To qualify for this deduction, your investment expenses must exceed 2% of your income. So you might not get credit for this deduction unless it exceeds 2% of your adjusted gross income.

If you qualify, you can take deductions for the following investment-related expenses:

- Safe deposit box fees
- IRA custodial fees
- Investment advisory fees (such as a financial planner or tax advisor) <<<<<<<<<
- Depreciation of equipment to manage your portfolio (such as a computer)
- Legal fees
- Investment publications (including magazine subscriptions)
- Telephone, copying, and postage fees
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Re: What is the investment expenses deduction

Postby guest » Wed Mar 02, 2016 10:03 pm

Fees for investment counsel and advice, including subscriptions to financial publications
IRA or Keogh custodial fees, if paid by cash outside the account
Software or online services you use to manage your investments
Safe deposit box rent, if you use the box to store certificates or investment-related documents
Transportation to your broker’s or investment adviser’s office
Attorney, accounting or clerical costs necessary to produce or collect taxable income
Charges for automatic investment services and dividend reinvestment plans
Costs to replace lost security certificates

Investment-related expenses that can't be deducted include:
Trading commissions—these are "capitalized" to increase your cost basis and/or reduce your taxable sales proceeds
Costs of traveling to attend a shareholder’s meeting
Investment advisory fees related to tax-exempt income—you generally need to prorate these fees based on the portion of tax-exempt investment income versus total taxable investment income
Borrowing costs associated with life insurance
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Re: What is the investment expenses deduction

Postby guest » Wed Mar 02, 2016 10:05 pm

COMMON DEDUCTIBLE INVESTMENT EXPENSES

1. Legal and professional fees. If you paid for legal advice regarding your investments, the cost is deductible. The same holds true for fees paid to an accountant for tax advice about your investment activities and transactions.

2. Investment advice. You can deduct payment to a broker or an investment manager for portfolio management. However if your portfolio includes tax free income, the investment fees must be prorated based upon taxable and tax free income, and the portion allocated to tax free income is not deductible.

3. Safe deposit box rental. These fees are deductible if the box is used exclusively to store securities and documents related to your investments.

4. Investment-related publications. Also deductible is the cost of financial newspapers, such as the Wall Street Journal or the Financial Times, as well as financial magazines, journals and newsletters. To qualify for the deduction, the IRS says that there must be a credible relation between the information, the advice gained and the taxpayer’s investment activity.

5. Travel and transportation costs. You may claim a deduction for travel costs incurred to look after your investments, or to seek investment advice from an attorney, accountant, investment advisor, or stockbroker.

6. IRA and Keogh investment fees. These fees are deductible only if they are billed and paid by assets outside the retirement account. If the fees are subtracted from your IRA or Keogh account, they are not tax deductible.

7. Fees to collect income. You can deduct fees you pay to a bank, broker, trustee or agent to collect investment income, such as your taxable bond interest or stock dividends.

NON-DEDUCTIBLE INVESTMENT-RELATED EXPENSES

Not all investment-related expenses are deductible. For example, you cannot deduct commissions or brokers’ fees on the purchase or sale of securities. Instead, these expenses are added to the investment’s cost basis, which reduces your taxable gain when the asset is sold. The same rule applies to mutual fund expenses.

You may not deduct travel costs associated with attending seminars, conventions, or similar meetings for investment purposes, nor can you deduct the cost of attending a stockholders meeting, even if you own stock in the company.
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