Whether you’re a stock market bull or bear, you have investment expenses – and you may be wondering if they’re deductible on your federal income tax return.
Here’s a quick review.
- What are investment expenses? Investment expenses are amounts you pay to produce or collect taxable income, or to manage, conserve, or maintain your investments.
Professional investment advice or financial newspaper subscriptions are examples of deductible items, as is safe deposit box rent when you use the box to store investment papers. You can also claim fees you incur for replacing stock certificates.
- How much is deductible? Investment expenses are miscellaneous itemized deductions, meaning your total costs generally have to be greater than 2% of your adjusted gross income before you benefit. Other limits may also apply.
- What isn’t deductible? Some investment costs, such as broker’s commissions for buying and selling stocks, are considered part of your basis and affect your gain or loss when you sell the investment instead of being currently deductible.
Travel and fees you pay to attend seminars, conventions, or other meetings – including stockholder meetings – are not deductible, nor are expenses related to tax-exempt income.
Other rules govern certain costs related to your investments, such as interest paid on money you borrow to buy stocks.
Please give us a call to discuss investment-related expenses. We’ll be happy to help you get the greatest benefit.