investment expense?

Question

Interests, dividends and capital gains are taxed as income, either ordinary income or capital gain. I was told if done wisely, the income can be deducted as an investment expense? How do I do that?

OK, I appreciate those two said "No", can someone knows how to do it "wisely" tell me how?

Answer 1

Excellent question. I wish I saw it earlier.

OK, here it goes. There are two types of investment costs..."interest" you pay and "expenses" you pay that are not tied to a specific transaction.

Interest:

Investment interest (the interest you pay to borrow money to invest, for example margin interest) is written off on line 13 of Schedule A. Of course, you have to itemize to get the deduction. The amount of interest you can write-off is limited by the interest you "made" that same year. Interest you made is the combination of regular taxable interest, non-qualified dividends, and short-term capital gains. If your investment interest EXCEEDS these items, you have two choices.

a) Use whatever you can and roll over the unused investment interest to next year

b) Convert as much long-term capital gains into short-term capital gains or qualified dividends into non-qualified dividendends so that they total up to the unused interest you want to write off. That is probably the "wisely" thing you were told about.

Expense:

Includes paying for investment advice, subscriptions to magazines, yearly fees to brokers, and whatever else you have that is NOT tied directly to a specific investment transaction. Add them up and enter them on Schedule A on line 22 "Other expenses" subject to the 2% limitation. The higher your income, the more things you'll need in this overall category (line 23) to get a tax break.

OK?

Answer 2

You can't. Income is income, expense is expense. They are opposites. You can deduct investment expenses to the extent of your investment income. Investment expenses are things such as account management fees. I have also seen people that will take an investment seminar and deduct the seminar fees or purchase investment books or and deduct the cost of investment books as investment expenses. Since the cost of a book is rather small when taken in context with the total amount of income an individual may have on their tax return, the risk of audit is very small. If you were to be audited and the only thing the IRS has to question is the deduction claim for a $20 book, they would probably not even bother proposing an adjustment. A disallowance of a $20 book might mean $5 or $6 difference in tax. It would cost the IRS probably 50 or 100 times that just to collect the $6 from you.

Answer 3

No, purchases of shares or different investments isn't an funding fee. An funding fee could comprise the curiosity you paid on borrowed budget that have been used for funding functions. Investment expenditures are restrained to the funding earnings suggested within the yr that the fee used to be incurred. If the expenditures are higher than the earnings, you deliver the surplus ahead to years to come and use it there if viable. If you're nonetheless within the poor while you promote, you utilize it to expand your foundation while you promote.

Answer 4

It's not possible to do. Income is income, you can only use expenses to offset it but your account usually shows the income with the expenses taken out already like your brokerage fee's if any etc. or your trading fee's.

Answer 5

It's easy - and now look up fraud according to IRS regulations on

Perhaps that person just wasn't caught yet.

www.IRS.GOV
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