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Ideasgirl
Returning Member

Turbo Tax is not deducting investment interest expense from the investment interest income

It shows it properly on Form 4952, but still transfers the full amount of investment interest income to 1040
3 Replies
MarilynG1
Expert Alumni

Turbo Tax is not deducting investment interest expense from the investment interest income

Investment interest expenses are an itemized deduction, so you have to itemize to get a tax benefit.

 

If you do, your investment interest expenses will show on Line 9 of Schedule A. But keep in mind that your deduction is capped at your net taxable investment income for the year.

 

Click this link for more info on Investment Expense Deductions

 

 

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Ideasgirl
Returning Member

Turbo Tax is not deducting investment interest expense from the investment interest income

Thank you for your response.  Yes I did itemize and it shows ZERO for the deductible.  We have $15000 carry-forward Investment interest expense, and $11000 more for this year.  We have Investment interest income of $395.  I would think that I should have either $395 deductible on sch A, or have a ZERO on the Taxable interest line on the 1040.

 

We also have other investment expenses that are not eligible for deduction or carry-forward (very sad by the way),

 

I don't know what I am missing.  On Form 4952 Line 6 shows Net Investment Income ZERO.   I guess I don't understand why it is being disallowed, but that is what the software is doing.

Thank you for your assistance !

Ideasgirl
Returning Member

Turbo Tax is not deducting investment interest expense from the investment interest income

Remarkably, I found if I remove all my Investment Other Expenses (which are not deductible anyway), it then allows the Interest Income to be offset by the Interest Expense.  Meaning the Interest Income still gets put on 1040 as Taxable Interest, but the Investment Interest Expense finally gets put on the Sch A and deducted, if you have enough deductions to use Sch A over using the Standard Deduction.

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