How do I deduct Investment Advisory Fee in California Return 2019? (2024)

FAQs

How do I deduct Investment Advisory Fee in California Return 2019? ›

How do I deduct Investment Advisory Fee in California Return 2019? if you've entered the correct amount of expense that would be deductible on the CA return, enter nothing in the Other Deductible Expenses section of the CA return. Investment expenses such as these are no longer deductible on the federal side.

Yes, as long as the fees involved an account other than a retirement account.

The Tax Cuts and Jobs Act (TCJA) of 2017 put an end to the deductibility of financial advisor fees, as well as a number of other itemized deductions. As of January 2018, these fees no longer contribute to reducing your tax bill.

Simply go to “Statement of fees charged to your account” and look for “Fees incurred.” Remember that management fees are only tax deductible when incurred in non-registered accounts. Talk to a tax professional to ensure you're taking advantage of all the tax deductions and credits available to you.

Investment advisory fees are deductible as 2% miscellaneous deductions on your CA tax return only for fees related to taxable income. So, no, those for retirement accounts are not deductible.

The Tax Cuts and Jobs Act suspended Section 212 deductions through the end of 2025.

Generally, California law for the investment interest expense deduction follows federal law. Get the instructions for federal Form 4952, Investment Interest Expense Deduction, for more information.

Taking the deduction

To actually claim the deduction for investment interest expenses, you must itemize your deductions. Investment interest goes on Schedule A, under "Interest You Paid." You may also have to file Form 4952, which provides details about your deduction.

Investment interest expense

If you itemize, you may be able to deduct the interest paid on money you borrowed to purchase taxable investments—for example, margin loans to buy stock or loans to buy investment property.

Whether a cost is subject to the 2% floor depends on the nature of the expense. For instance, trustee fees are deductible in full because these fees are by definition incurred only when assets are held in trust. Other types of fiduciary expenses – most notably, investment advisory fees – can be subject to the 2% floor.

Where to put IMA fees? ›

You can also claim the IMA fees (investment management fees) shown in the footnotes of your T3 slip, on the Statement of investment income, carrying charges, and interest expenses page. Enter your IMA fees under the Carrying charges, interest paid, and other expenses section on this page to claim a deduction.

The Internal Revenue Service (IRS) enables taxpayers to consider legal fees linked to their trade or business as a deduction on their tax return.

Many financial advisors use a fee structure called an AUM fee, or a percentage of assets under management. That fee is most commonly 1% per year, though there are plenty of services (like robo-advisors) that charge substantially less.

The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the deductibility of financial advisor fees for tax years 2018 through 2025.

Investment/Advisory fees are entered as an itemized deduction of Schedule A subject to 2% of your adjusted gross income. If you have any of the investment-related expenses below, enter them under Other Investment Expenses, in Retirement and Investments.

The Short Answer: Currently, the majority of miscellaneous itemized deductions, such as IRA management fees, cannot be deducted on your personal tax return for 2023. Due to the Tax Cuts and Jobs Act (TCJA) that was enacted into law by Congress on December 22, 2017, other IRA management fees are not deductible.

Investors can no longer deduct any costs associated with producing investment income, including: Financial advisor fees. Rental fees for a safe deposit box. Fees paid to brokers or trustees to manage IRAs and other investment accounts.

Utilize a trust as owner of the advisory account

Individuals can no longer deduct advisory fees, but a trust as owner may still be able to take this deduction. The repeal on deducting advisory fees under the new law may not apply to irrevocable (i.e., non-grantor) trusts or estates.