I have federally tax-exempt interest dividends that get taxed as Illinois income. Under the TT interview, it asks "Any Deductible Expenses?" In 2021, did you pay any expenses that:Were used to maintain investments that are exempt from federal tax, but are taxable to Illinois?Were disallowed on your federal return because you took a credit for them?"Are the "advisory fees" I paid to my brokerage account throughout 2021 that held this asset that generated the subject income a deductible expense per the first bullet? Thanks - Carris

TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 4

Solved

Investment Deductions for State Filing

3 replies
56 views

I have federally tax-exempt interest dividends that get taxed as Illinois income. Under the TT interview, it asks "Any Deductible Expenses?" In 2021, did you pay any expenses that:

Were used to maintain investments that are exempt from federal tax, but are taxable to Illinois?
Were disallowed on your federal return because you took a credit for them?"

Are the "advisory fees" I paid to my brokerage account throughout 2021 that held this asset that generated the subject income a deductible expense per the first bullet?

Thanks - Carris

JohnW152Answer

Alumni - Intuit

You can take, as a subtraction against Illinois income, the portion of the $1,000 that relates to the portion of your investment that was exempt from federal tax, but taxable by Illinois.

If your entire portfolio is the federally tax-exempt income, you can claim the entire expense. If, say, 25% of the portfolio is reflected by this income, you can claim 25%. Make a reasonable estimate.

See Schedule M IL-1040 Instructions for more information.

AliciaP1

Alumni - Intuit

Yes, if the expenses were necessary to maintain the account they are deductible against the dividend income from the investment.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

carriskoulAuthor

Level 4

Thank you AliciaP1.

This was the fee the brokerage charged as a percentage of my portfolio value. So if let’s say I paid the brokerage $1,000 to manage my portfolio for the year, then I can deduct that $1,000 on my state return even though the dividend income was from a portion of the portfolio. Is this correct?

JohnW152Answer

Alumni - Intuit

You can take, as a subtraction against Illinois income, the portion of the $1,000 that relates to the portion of your investment that was exempt from federal tax, but taxable by Illinois.

See Schedule M IL-1040 Instructions for more information.