How ( tax form?) can I take deductions on my US individual taxes for margin interest paid on brokerage acct?

Answer 1

Investment interest (the interest you pay to borrow money to invest, for example margin interest) is written off on line 13 of Schedule A. This means, you must file a 1040 form and itemize in order to take the deduction. If you total deductions do not exceed your standard deduction, you won't benefit by claiming the interest.

The total amount of interest paid you can write-off is limited by the interest you "made" the same year. Interest you made is the combination of regular taxable interest, non-qualified dividends, and short-term capital gains. If the investment interest you paid EXCEEDS the interest you made, you have two choices.

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

b) Convert some long-term capital gains into short-term capital gains or qualified dividends into non-qualified dividends (by electing to do so). Only convert enough to make up for the shortfall. You can convert from long (qualified) to short (non-qualified) anytime you want, but you can't go the other way.

OK?