Expenses related to investment activities may be tax deductible. You may be pleasantly surprised by the items that can be deducted on your tax return in connection with investments. These expenses are deductions reported on Schedule A, Itemized Deductions, and are subject to a floor of 2% of your Adjusted Gross Income.
To be allowable, the deduction must be the taxpayer’s own expenses and must be ordinary and necessary, and proximately related to the production or collection of taxable income. Fees for services of investment counsel, custodial fees, costs of clerical help, office rent, and similar expenses paid or incurred by taxpayers in connection with investments they own are deductible. However, expenses for conventions or seminars related to investments are not deductible. The following expenses may be deductible investment expenses:
- travel to broker’s offices and investment sites;
- bank fees and safe deposit rental;
- fees for IRAs;
- mortgage pool service fees;
- custodian fees for investments, and/or
- subscriptions to investment related publications.
Investing does not constitute a trade or business. Managing one’s own investments in stocks and bonds almost never constitutes a trade or business, even though an investor’s activities may include buying and selling securities as well as owning the investments for the production of income. An investment club or partnership also does not constitute a trade or business.
Subscriptions to the Wall Street Journal and professional/investment magazines and books are deductible provided there is a credible relation between the information and advice gained for the taxpayer’s investment activity.
No expenses allocable to a convention, seminar or similar meeting are deductible as expenses for the production of income. Convention and seminar expenses are deductible only if incurred in connection with a trade or business.
If you would like further information on how expenses specifically related to your investment situation may be deductible, please do not hesitate to contact Henssler Financial at 770-429-9166 or experts@henssler.com.