You do not need to be a full-time investor in order to reap the benefits associated with deducting the cost of investing. Whether you are a part-time investor with a full-time job outside of investing, a part-time investor who is self-employed and works in your home or an active investor with no other job, you may be able to deduct costs associated with investing.
What criteria must one meet in order to be able to take advantage of deducting investments costs? These deductions, along with your other miscellaneous itemized deductions, must exceed 2% of your adjusted gross income before you use these costs as a deduction on your tax return. Unfortunately, most people do not incur this much in investment expenses alone to be able to take the deduction. Even if you do meet this requirement, your write-off may not turn out to be as valuable as you thought. If your adjusted gross income exceeds $128,950 for joint filers or $64,475 for single filers, you will lose three cents of every deduction dollar for dollar. Lastly, if you fall under alternative minimum tax guidelines, these miscellaneous itemized deductions are completely disallowed and you will get little or no actual tax benefit.
What exactly are investment interests and what can and cannot be used as a deduction? Investments expenses are outlays for things like fees for professional investment advice, subscriptions for investment-related publications, accounting and legal fees related to investment activities, the portion of your ISP charges incurred to follow and trade investments, your home computer, possibly even your home office if you qualify.
Expenses you cannot deduct include the following: