A:

There are some investing costs that can be written off each year, even if you aren't a day trader. The general rule in determining whether an investment expense is deductible is that the expense needs to be ordinary and necessary to produce or collect income, or in the management of property used to produce income. These expenses must be directly related to the income produced such as a trading program used to generate capital gains through stock trading. Furthermore, these expenses can't total more than 2% of your total annual gross income.

Investment advice from an advisory service or consultant can be deducted as an investment expense as long as it is related to the production of taxable income. This can include a subscription to an investment newsletter or other similar service. However, investment-related seminars can't be deducted - so if you pay to attend an investment seminar, convention, or similar type of meeting, you won't be able to write off that expense. Therefore, it is unlikely that most investment courses are deductible. However, in some cases, a course may be eligible so it is important to consult the course facilitator or your accountant.

Here is a quick summary of which investment-related expenses can and cannot be written off:

Deductible:

  • Investment advice
  • Attorney and accounting fees
  • Fees from automatic investment services and dividend reinvestment plans (DRIPs)
  • Clerical help and office rent
  • Cost of replacing missing securities
  • Fees associated with the collection of income
  • Safety deposit rent

Not Deductible:

For more on the deduction of investment expenses for tax purposes see the Investment Expenses section of IRS Publication 550: Investment Income And Expenses.

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