when are investment advisory fees deductible?
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Deduction Rules for Pre-2018 Like tax preparation fees, investment management fees, and financial planning fees may be taken as a miscellaneous itemized deduction on your tax return, but only to the extent that they exceed 2% of your adjusted gross income (AGI).
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Specifically, page 10 of Publication 529 states, "You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income."
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Thus, the fee is not tax deductible since these income category investments are not a trade or business activity. ... agent and employee compensation – including fees, wages and benefits; the California Bureau of Real Estate (CalBRE) license fee (broker or salesperson) [IRS Publication 529];
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It is clear that any miscellaneous itemized deductions subject to the 2 percent of adjusted gross income (AGI) limitation, such as investment management fees, are no longer deductible by a trust or estate. However, it is less straightforward for other expenses.
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Individual taxpayers can still claim investment interest expenses as an itemized deduction on Schedule A of their Form 1040 tax returns. The Tax Cuts and Jobs Act (TCJA) eliminated most miscellaneous itemized deductions beginning in 2018 through at least 2025, but the investment interest deduction has survived.
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Like tax preparation fees, investment management fees, and financial planning fees may be taken as a miscellaneous itemized deduction on your tax return, but only to the extent that they exceed 2% of your adjusted gross income (AGI). Again, these apply only for amended returns for years when the rules applied.
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If your expenses are less than your net investment income, the entire investment interest expense is deductible. If the interest expenses are more than the net investment income, you can deduct the expenses up to the net investment income amount. The rest of the expenses are carried forward to next year.
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The Tax Cuts and Jobs Act disallows the deduction for interest on home equity loans for the 2018 through 2025 tax years. ... As long as you are using your investment property equity line to produce income, you can still deduct the interest on your taxes.
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The issue for estates and trusts is that the fiduciary tax laws follow individual tax law, unless explicitly exempted. ... Therefore, under the TCJA, estates and trusts can no longer deduct investment advisor fees.
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Due to the Tax Cuts and Jobs Act (TCJA) of 2017, certain investment-related expenses are no longer deductible if you itemize. ... Up to $3,000 of capital losses can be used to offset your ordinary taxable income.
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Fees for your investments may be deductible, Patti. Fees related to accounts that are tax sheltered, like RRSPs, RRIFs, pensions, or RESPs are never tax deductible. ... You can only claim fees that relate to taxable investment accounts like non-registered investment accounts, but not all fees.
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They are under trust law properly chargeable against income. ... 'You cannot deduct costs, charges and expenses that you incur for the benefit of the whole trust. This includes legal expenses, investment advice or the cost of changing trust investments. Under trust law such expenses are properly chargeable to capital.
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Investment interest expenses are an itemized deduction, so you have to itemize to get a tax benefit. If you do, enter your investment interest expenses on Line 9 of Schedule A. But keep in mind that your deduction is capped at your net taxable investment income for the year.
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Advisory fees are deductible against any type of income at the federal level. However, Quebec has its own rules in this area. In Quebec, advisory fees are only deductible against investment income (interest, Canadian dividends, foreign income and taxable capital gains).
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Also, while investment and portfolio management fees are no longer deductible under the Act, fiduciary fees and other costs to administer the trust would continue to be deductible. Note however, that an important caveat remains. Grantor trusts would not fall into this exception.
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Under prior tax law, a fiduciary could deduct most expenses incurred by an estate or trust against the income. ... Therefore, under the TCJA, estates and trusts can no longer deduct investment advisor fees.
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On form 8960, miscellaneous investment expenses on line 9c can be deducted only to the extent these items are deductible in Schedule A. As the new tax law has suspended the itemized miscellaneous deduction, these expenses are not deductible on form 8960 either.