How to Deduct Investment Service Fees From Taxes

How to Deduct Investment Service Fees From Taxes. Investment expenses are allowable deductions from your taxable income. These expenses are itemized on Schedule A of your Form 1040 income tax return. These deductions are subject to the 2 percent of adjusted gross income (AGI) limitation which means that those items affected by the limitation cannot exceed 2 percent of AGI to have any deduction effect.

Download Schedule A of Form 1040 from the IRS website. Schedule A contains all itemized deductions, including miscellaneous deductions where investment expenses are deducted.

Summarize your investment expenses for the year, including investment service fees, custodial fees, trust administrator fees and other fees for managing your investments. Broker commissions that you paid to buy or sell stocks are not deductible as an investment expense.

Exclude fees paid in regard to tax-exempt income. Since publicly offered mutual funds do not pass deductions for investment expenses through to shareholders, there are no deductions applicable to them.

Compare your total allowable investment expenses along with other expenses affected by the 2 percent of AGI limitation. If these expenses do not exceed 2 percent of AGI, it will not be worthwhile to report them on your Schedule A of Form 1040.

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