Can I deduct investment expenses, such as the cost of my investment advisor, on my 2019 California Income Tax return?

[AN75]

If I enter the amount for advisory fee in federal>deductions and credits>retirement and investments> section in TurboTax, is it transferred to the state tax calculation for California ? Or I have to re-enter the amount in the  investment income expenses for state tax?

[AN75]

If I enter the advisory fee in federal>deductions and credits>retirement and investments> section in TurboTax, is it transferred to the state tax calculation for California ? Or I have to re-enter the amount in the investment income expenses for state tax?

[JotikaT2]

That is correct. You will need to make your entries in the Federal interview section even if you are taking the standard deduction on your federal return. 

Your input in this section will pull into your state return if you are able to itemized deductions on your state return.

[melatt]

This does not seem to be true. I entered an amount for "Investment Advisor Fees" in the federal deduction portion (it said these were not deductible for federal tax purposes, but could be for state), but I do not see this accounted for anywhere on my California return. Another bug?

[melatt]

Sorry, it looks like my previous post was wrong. I was able to find the amount transferring to Line 21 of Schedule CA (540). Everything looks ok.

[melatt]

Just to be clear: that is Line 21 of Side 3 of Schedule CA (540). (There is more than one "Line 21" in that form.)

[AmyC]

@melatt    Yes, page 3, line 21 of schedule CA. See 2020 Instructions for Schedule CA (540) | FTB.ca.gov

[AN75]

I added advisory fee and I see the amount shows up in Line 21 AND Line27 for some reason which doesn't seem to be right. If I remove the amount in other investment expense in TurboTax, the amount in 21 is gone, but the amount in Line 27 stays. I am not sure how I messed this up and how to get rid of the amount in Line27 From Turbotax? I looked through all interviews in TurboTax but I cannot fine any to get rid of Line27.

[wells_todd]

When entering my Investment expense for the cost of my broker management & advisory services, Turbo tax says its not taxable at federal level but possibly in my state.  When entering California information (on the Investment expense adjustment) is it the same value as entered on my Federal or is there a true adjustment value for CA as it says if its smaller enter as a negative number lese enter as positive number.  

Thanks

[Cynthiad66]

According to this Turbo Tax link, investment fees are deductible in California. here is how you will claim them

1. log into your turbo Tax return
2. Select state in the left navigational pane in your program  Select state
3. If California is not selected, add state and select California
4. As you navigate through the questions you will arrive at a screen that says  Here's the income that California handles differently
5. Go to Investments>Investment Income Expenses
6. Per @DavidF 1006

[afreedmanlaw]

For the first time, I am encountering  this elimination of the "investment  advisory  fees"  as a Schedule  A Miscellaneous deduction.  All the  TT posts  I see  talk about  possibly still being able to take  that deduction on a  CA  state return, which does not apply to me. 

Question:  Is there any other way to still take this deduction on a  federal 1040 return?  Seems intuitive that this should  be able to be taken as a straight reduction of the  income generated through  the advisor's input; but I am  wary of making any adjustments to  the income amounts  reported on my Forms 1099-DIV  and  1099-B.

For the  record, I am self-employed and file  Sched. C. But  I am in process of retiring and my self-employed income is rather low in recent  years. Also my investments are  not really connected to my self-employment, except that they provide me with needed additional income. 

[VolvoGirl]

Sorry,  See Deductions that have been suspended for 2018-2025 under Other Misc Deductions subject to the 2% limit

https://ttlc.intuit.com/community/tax-reform/help/which-federal-tax-deductions-have-been-suspended-b...

[Ron96]

Could you please clarify your response regarding investment expenses/advisory fees for Rollover IRA accounts and/or Roth IRA accounts.  If the aforementioned fees are paid directly from those Rollover IRA or Roth accounts and not from "already taxed" money, do those fees still qualify as a deductible expense for California state taxes? Thank you!

[afreedmanlaw]

Sorry, I  don't have an answer to your   specific question.  However, for some time I have been trying without any  success to find  an answer to this  larger question:  Is there a way to deduct  my investment advisory fees from the gains shown in my Forms 1099 and 1099-B  provided  by the advisor  when preparing my federal 1040  return ?    It seems really intuitive,  but  I have not seen  any worthwhile answer  to this primary question.

[LenaH]

No, there is no way to deduct your investment advisory fees from the gains shown on Forms 1099-B on your federal 1040 return on Schedule A. 

Prior to 2017, these miscellaneous expenses were reported on Form 2106. Taxpayers were allowed to deduct the portion of these miscellaneous expenses that exceeded 2% of their AGI, provided they took the itemized deduction. The 2% rule referred to the limitation on certain miscellaneous itemized deductions, which included things like unreimbursed job expenses, tax prep, investment, advisory fees, and safe deposit box rentals.

Under the Tax Cuts and Jobs Act (TCJA) that Congress signed into law on December 22, 2017, the deduction for these 2% miscellaneous expenses has been suspended in tax years 2018 through 2025. This does not apply to self-employed individuals. You can deduct business-related expenses on Schedule C if your fees are not personal in nature. However, you stated that they were not business-related. 

@afreedmanlaw