While individual investors may not have the same expenses that small business owners do, such as marketing and advertising, there are still many expenses that you can use to your advantage to get tax benefits. Here are four things that investors can write off as expenses on their tax returns.
Do you pay fees to a registered investment advisor in order to figure out what and when to buy and sell? You may be able to deduct those expenses on your tax returns. This is not limited to paying an advisor, either. If you spend money on educational resources to help expand your investing knowledge, such as informational services, newsletters, and magazines, you may be able to deduct those expenses as well. However, these expenses must not be less than two percent of your adjusted gross income.
The same goes for fees you pay to your accountant if they exceed two percent of your adjusted gross income. However, you can not claim exemptions on commissions, nor can you claim exemptions on fees related to tax-advantaged investments.
Travel expenses can be tricky when it comes to tax deductions. The laws here are complex. For example, the cost of transportation to your broker or investment advisor can be deducted. The same does not apply to transportation to a shareholder’s meeting or an investment seminar. If you are a real estate investor and need to travel to your property, it will depend on whether you have an office and how far you are traveling.
If you use a computer to make your trades, your deduction will depend on how much you use your computer for investing vs. personal uses. You can also usually deduct costs for online software that you use for trading.
Tax preparation expenses and tax advisory expenses can usually be deducted if you are an individual investor.
Tax exemption laws for investors are complex. It is best to get professional help to help you maximize your deductions. Contact us today for help