Investment-Related Expenses

If you have investment-related income, it's likely that you'll have at least a few investment-related expenses as well. Unfortunately, many taxpayers aren't able to deduct these expenses because most of them are classified as miscellaneous itemized deductions, which are only deductible to the extent that they exceed 2 percent of your adjusted gross income.

However, if you have interest expenses related to your investments, it may be a different story. Read on to see how to deduct:

Claiming your deduction. Your investment expenses are included on Line 23 of Schedule A, Itemized Deductions. If you don't have room to list the categories of expenses you paid on the dotted lines following Line 23, you can attach additional sheets of paper to your return.

Tip

Beginning in 2013, a new 3.8 percent net investment income tax may be imposed on individuals whose modified adjusted gross income exceeds $250,000 for joint filers, $125,000 for married taxpayers filing separately, and $200,000 for others. Trusts and estates with income over a certain amount are also subject to the NII tax. Form 8960, Net Investment Income Tax� Individuals, Estates, and Trusts is attached to the tax return. For 2013, the IRS has provided taxpayers the ability to rely on more than one set of net investment income tax rules. The best choice varies by taxpayers and depends on the taxpayer's unique situation. Consult your advisor to determine which approach would be best for you.