7 Investment Tax Breaks You Need To Know

1. Investment Publications• Any of the following can

be deducted on your tax return:– 1.) Investment-based

newspapers like the Wall Street Journal or Investors Business Daily

– 2.) Magazines related to investing or finance (Money, Kiplinger’s, etc.)

– 3.) Online news services, like those offered by The Motley Fool

Tips to maximize your deductions• Always save your receipts to keep track of your

qualified purchases• It may feel silly to ask for a receipt every time

you buy a $1 newspaper or $3.99 magazine, but those little purchases could mean a pretty big deduction over the course of a year

2. Safe Deposit Box Fees• If you keep any

tangible investments in a safe deposit box, the costs can be deducted as an “investment expense”

• Qualified items include– Stock certificates– Precious metals– Various investment

paperwork

Tax tips….• Just in case you get audited, it is a good idea to

have pictures of your safe deposit box and its contents available to demonstrate its use for investment purposes

3. Retirement Account Fees

• If you are charged fees related to your retirement accounts, they might be tax deductible

Flickr/ 401(k) 2012

Tax tips….• Some people elect to have fees automatically

debited from their account• Instead, pay your fees by check to ensure you

can deduct them as an investment expense

4. Hired Help• Any professional who

helps you manage your investments is a potential deduction

• You can deduct fees paid to – Accountants– Investment managers– Lawyers (when used

for investment reasons)

Andy Hill

5. Traditional IRAs• Contributing to a

traditional IRA is one of the biggest tax deductions you may be entitled to

• Depending on your income, you can deduct up to $5,500 in contributions for 2014– $6,500 if you’re age 50

or olderFlickr/ 401(k) 2012

Tax tips….• To check if you qualify, read over the IRA income

limits here• The amount you can deduct depends on your

income, marital status, and whether or not you can participate in a retirement plan at work

• Bear in mind that you will have to pay taxes on the money when you eventually withdraw it

• If you’d rather take the tax benefit when you retire, a Roth IRA might be better for you

6. Long-Term Capital Gains• If you hold your winning

investments for more than a year, the gains will be taxed at a substantially lower rate than ordinary income

• Current long-term capital gains taxes are– 0% for the 10% and 15%

tax brackets– 15% for the 25%, 28%,

33%, and 35% brackets– 20% for the 39.6% tax

bracketFlickr/ 401(k) 2012

7. Charitable Stock Donations• If you donate stock

to a charitable organization, 100% of the market value of the stock may be written off

• A good strategy for winning stocks

Wikipedia/ Downingsf

Tax tips….• If you donate a winning investment, you actually

get a double tax benefit• Let’s say you paid $1,000 for a stock worth $2,000.

• If you sold the shares and donated the cash, you would still be responsible for capital gains tax on the profits.

• However, if you donate the shares, not only do you avoid the capital gains tax, but you get to deduct the full value of the shares ($2,000)

Take advantage of this little-known tax loophole