Is an Investment Newsletter Tax Deductible?
Investment newsletters and online subscriptions provide invaluable assistance in managing your investment portfolio. Whether you qualify as an investor or a trader, the expense you incur as you seek investment advice is considered part of the cost of making money and is tax deductible. Don't add up those subscription costs just yet, though -- for average investors, the tax benefit is negligible.
Other People Are Reading
-
Deductible Items
-
You can deduct the cost of investment advice you receive in the form of newsletters, journal subscriptions and one-to-one discussions with investment professionals. You must spend this money with the intent of making money -- that is, you must use the information to assist you as you manage an investment portfolio. You can take the deduction, along with deductions for other eligible expenses, on Schedule A as part of your annual Form 1040 filing.
Two Percent Floor
-
Investment newsletters are part of a catch-all category known as miscellaneous expenses. To qualify for a tax deduction, your total miscellaneous expenses must be greater than 2 percent of your adjusted gross income as calculated on your Form 1040.
-
Additional Considerations
-
There are a number of additional items that qualify toward the 2 percent floor for miscellaneous expenses. These include attorney or accountant fees, fees paid to participate in automatic investment or reinvestment programs, fees paid to collect income, custodial fees and trustee fees. You generally can't deduct the cost of attending investment conferences or workshops, and you can't deduct your broker's commissions for buying and selling assets.
Traders
-
If you qualify as a trader by IRS standards, miscellaneous expenses like investment newsletters become business expenses and fall under a different set of rules. The IRS standards for traders are very strict, however: you must seek to profit from market fluctuations rather than long-term growth (no "buy-and-hold" strategies for traders). You must make a significant portion of your income from trading, and you must spend time in proportion to the money you hope to make. In other words, it must be your job. If you believe you are a trader, sit down with an accountant to go over your business activities and ensure you meet the qualifications.
-
