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Level 2

Question

Are broker investment advisory fees deductible?

Forum|Forum|7 years ago
June 7, 2019
7 replies
10 views

My financial institution charges me 1% to manage my portfolio of both taxable (45%) and non-taxable (55%) accounts. The monthly fees are listed as either a monthly program fee or an investment advisory fee and they are paid from the IRRA non-taxable account. Are these fees deductible or can I prorate the fees to both accounts and only deduct the portion of the fees for the taxable account? Also, when I meet with my broker every quarter there is no advisory fee for the session since this is considered part of the monthly advisory fees. Can I allocate a portion of the monthly advisory fee for these advisory meetings as a deduction?

ajfox45

Level 2

Where are they deducted on my 2018 return?

Anonymous

investment fees are no longer deductible after 2017

christinaINT

Level 2

what is mileage

Anonymous

Yes, you can deduct the 2014 investment advisory fees associated with your taxable account on your 2014 tax return. The investment management fees associated with your tax deferred accounts can not be deducted on your 2014 tax return.

Investment management expenses are a miscellaneous deduction on Schedule A (Itemized Deductions) subject to 2% of your adjusted gross income. To enter this amount in TurboTax Delux

Select the "federal" tab, then "deductions & credits." Then select "find deductions myself" then "other deductions & credits" then "other deductible expenses." Say yes to the "other less common expenses" screen then you'll finally see a screen saying "enter other less common expenses." Enter your portfolio management fees here.

In order to get a tax benefit from this, you need to have more than 2% of your adjusted gross income in miscellaneous itemized deductions, plus you need to itemize your deductions on Schedule A. If you owe Alternative Minimum Tax, these miscellaneous deductions are not deductible.

saini

Level 2

This answer is INCORRECT. I believe TurboTaxGregH did not bother to read beyond the first sentence of the question. Davette said the fee was being paid out of a pretax account. Therefore it is being paid with money that has never been taxed, and since it is being paid directly from the pretax account, it never will be taxed, and there is no justification for deducting it from taxable income. The net result is the same as if Davette took money out the pretax account to pay the fee (making the money subject to tax), and then deducted the fee from taxable income. I have consulted NUMEROUS tax experts on this point. In order for the investment advisory fees to be deductible, they MUST be paid out of a regular account (not a 401(k), IRA or similar). Whether the investment advisory fees are used to advise on pretax or post-tax accounts is immaterial.

joanne373

Level 2

thanks

fanfare

Level 15

Investment account and management fees on tax-deferred investment accounts can be deducted, as long as the fee is paid, as you indicated, from a taxable account.

saini

Level 2

Starting Jan. 1, 2018, under the new Tax Cuts & Jobs Act, investment advisory fees (including account management fees) are NOT tax deductible, regardless of which funds are used to pay them. My previous answer failed to mention that, and so did several others' answers. For years prior to 2018, they were deductible under Miscellaneous Expenses (which only were deductible to the extent that they exceeded 2% of AGI), provided the taxpayer itemizes deductions and pays them out of post-tax (not IRA/401(k)) dollars.

Rick19744

Level 13

Part of the issue with this question is that it was rolled over from the "old" forum. When that occurred it messed up the date of the actual question and responses. This has been an issue with many questions. Just keep that in mind since some of the responses may have been responding to "older" tax law.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

Taxbo

Level 2

Are investment advisors fees deductible under the new tax law?

DoninGA

Level 15

@Taxbo wrote:

Are investment advisors fees deductible under the new tax law?

No they are not.

maglib

Level 11

@BRN2CRZ No, you can not take a deduction as they are paid before taxes. You would have to take a distribution which if a roth not taxed then pay them or you would have to pay taxes on a non roth distribution which wouldn't normally help you as the distribution would be taxable. As long as the money used was never taxed, there is no deduction.

The only impact of investment advisory fees would be state tax returns.

Hope this helps.

**I don't work for TT. Just trying to help. All the best. . ***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question. **Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.

fredschuhmann

Level 2

Are Broker Investment Advisory Fees deductible either on Federal or State Income Tax returns?

Vanessa A

Level 15

Yes, they are deductible, when you sell your investment, on Federal and generally are on your state, but every state has different rules.

When you report the sale of the asset you will be asked if you had any advisory fees, this is where you will enter them.

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

Tsing

Level 2

Now I am confused. At first you said that the brokers fees are not deductible, but now you say that they are. My financial advisors at a financial institute charges investment advisory fees. They do not report this information to the IRS. so can I deduct this as miscellaneous deduction in the investment?