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Investment Expense Tax Deductions
Expenses You Can Deduct
- The IRS allows you to deduct a number of expenses from your income. This include legal fees regarding investments, professional fees, fees for investment advice, cost of books and magazines on investments, safe deposit box costs used to store securities or paperwork, fees paid directly to an IRA or Keough custodian, traveling expenses, computer costs, software and service charges.
Expense You Can't Deduct
- There are some investment expenses that you can't deduct from your income. These include broker's commissions (these are taken into account when you calculate capital gains), check-writing fees, investment seminars, costs to attend a stockholder's meeting and expenses associated with creating tax-free investment income.
Where to Make the Deduction
- Investment expenses are listed as miscellaneous expenses on Schedule A of your Form 1040. This means you must itemize your deductions to be able to make use of the investment expense deduction.
Limits on Deductions
- Investment expense deductions must total up to more than two percent of your adjusted gross income on your Form 1040. Any amount over 2 percent can be deducted. You are also limited to deducting the amount of any loss you deduct to the amount of money you put at risk in the investment.
- The IRS also allows you to deduct investment interest using Form 4952. This applies to interest you pay on an investment that you hold unless the interest is paid to product tax-exempt income. For 4952, compute how much of the interest you can deduct and how much you can carry forward for a deduction in future tax years.