Is it possible to take a deduction on Margin interest expense on my Schwab investment account. I've noticed you can take a deduction on the interest paid on a business credit card, What say You?

You may be able to deduct margin interest expense on your Schwab investment account, as long as it qualifies as investment interest under IRS rules. Here’s how it works:

Deducting Margin Interest Expense

1. Investment Interest: Margin interest is considered investment interest if it’s paid on funds borrowed to purchase taxable investments. You can deduct this interest if you itemize deductions on Schedule A of Form 1040.
2. Limitations: The deduction is limited to your net investment income for the year. Any excess interest can be carried forward to future years.
3. Non-Deductible Interest: Margin interest used to buy tax-exempt securities is not deductible. The IRS rules specify that investment interest expense is only deductible if it is paid on funds borrowed to purchase taxable investments.

Helpful Links

• Investment Expense Deduction - Charles Schwab
• Guide to Margin Interest Deduction on Taxes
• IRS Publication 550 - Investment Income and Expenses