Where can I add deduction related to margin interest that I have paid to my stock brokerage firm?

[SabrinaD2 · Accepted solution]

Here is where in TurboTax you can deduct margin interest you have paid to your stock brokerage firm:

1. Open TurboTax  - Be sure you are logged in then click on link in step 2
2. Select Investment Expense
3. Continue through and answer questions related to margin interest paid to your broker.

Important Notes:

You can deduct margin interest as an investment interest expense, but there are some important details to keep in mind:

Investment Interest Expense: Margin interest qualifies as an investment interest expense. This type of expense is deductible only to the extent of your net investment income. If your investment interest expenses exceed your net investment income, you must complete Form 4952 to calculate the deductible amount.

For more detailed information, you can refer to the following resources:

• IRS Publication 550 on Investment Income and Expenses
• TurboTax Guide on Investment Interest Expense Deduction

[Edited 02/11/2025 |7:47 pm PST]  @fahezan

[arihantkkothari]

If I do NOT itemize my deductions -> Do I end up losing on the margin interest expenses completely? Given my dividends/interest INCOME exceeds the margin interest expenses:

1) Can I not subtract my interest expenses from the net investment income - and thereby reduce tax liability?

OR

2) since I am okay with taking standard deduction, can I chose to carry forward my margin interest expenses into the next year?

Am I going to lose all the benefit of margin interest paid if I do not itemize my deductions this year?

[fanfare]

You can file Form 4952 and carry the interest forward to some future year with dividends and itemization on Schedule A.

@arihantkkothari 

[Mike9241]

if you don' use itemized deductions, the investment interest expense for that year is not carried forward. you lose it.