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What Chicago Investment Income Is Deductible & Taxable

What Chicago Investment Income Is Deductible & Taxable

Investment Income: What is Deductible and Taxable in Chicago?
When discussing the taxes on investment income, the first step is to understand what qualifies as investment income. In most cases, investment income refers to money that is used to buy stocks, bonds or properties for investment purposes. A lot of people forget that they can deduct investment fees or related expenses through the miscellaneous deduction sections of the IRS tax filing forms. Here is a look at the specific investment expenses that count towards deductions.
Fees:
If you have any fees that you pay your financial manager or real estate agent, these are tax deductible. For example, if someone buys a real estate property and pays a certain percentage in fees to the agent, they are eligible for a deduction solely on those fees.
Similarly, any fees paid to accountants, lawyers or other individuals who take care of matters related to your investments are deductible under the same code. Even the money it costs to rent safety deposit boxes to keep your investment-related documentation qualifies as a deduction.
Some investment plans come with fees that are paid every month or every year. These are deductible. However, any money you pay in commissions to traders who buy and sell stocks on your behalf is not tax deductible.
Expenses:
When someone gets their investment done through a mutual fund or a similar partnership, they are eligible for deductions on the costs of doing business with that entity. Mutual funds often charge fees and markups for their services, which you can deduct on your tax forms.
If you need to get new certificates for your securities investments, this qualifies for tax relief. Even the money you pay for a newsletter or website subscription to keep track of stocks, bonds or market trends is deductible. Any money that goes to an investment advising firm falls under the same umbrella. If you are paying commissions to a trustee who handles your trust, deduct this money as well.

It is important to remember that these fees and expenses are only tax deductible if the resulting investments are producing income that is taxed. Be sure to talk with whoever is managing your finances about the tax situation regarding the money they are investing for you. If this money is not bringing taxable income, you are not eligible to deduct the fees relating to those transactions.
In some cases, the money someone invests on your behalf may result in taxable income, along with money that does not fall under a tax bracket. In this case, the fees must be divided proportionally between those services and deducted accordingly.

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