What Investment and Workshop Expenses Are Tax Deductible?

Action alert: You want to be very careful of the IRS rules for Schedule A (Itemized Deductions), Form 1040, when you file your personal tax returns. It is a high IRS audit area.

Question. This year I spent close to $2,500 for investment information to help me select stocks and monitor my personal investments. I also attended two investment workshops at a total cost of $600. Can I deduct the $3,100?

Answer. Let’s start with the workshops; they are not tax deductible. That includes the cost of the program, travel, meals, and lodging expenses.

Regarding any investment information you purchase, it is deductible but subject to limitation under the IRS’ 2% Rule for Miscellaneous Deductions (Lines 21 through 30 of Schedule A), which you prepare for your annual tax return. This is the category for tax preparation and investment counseling fees, investment publications, travel, safe deposit box rental, unreimbursed job expenses, fees for maintaining an IRA, etc. Only miscellaneous deducti­ons in excess of 2% of your adjusted gross income are tax deductible.

Example: If your adjusted gross income is $80,000 and your miscellaneous deductions total $2,500, only $900 is tax deductible. You lose the first $1,600 of deductions (2% times $80,000).

Relevant Resource:
Resource Report #32: Your Investments: 44 Action Alerts to Use Today and Throughout the Year