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Itemized Deductions Schedule-A


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Old 02-28-2008, 11:40 PM
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Advisory fee deduction?

My tax preparer & my financial planner are arguing over advisory fees as deductions. My tax preparer says that any advisory fee taken from an IRA account is not deductable, but a fee taken from a brokerage account is. My financial planner says that ALL of her fees are tax deuctable, regardless of which account they were pulled from.

I trust both of them. Who is right?

Sorry if this question has been asked already.



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Old 02-29-2008, 09:33 AM
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Are Financial Advisory Fee's Deductible on the Tax Return?

Actually, I agree with your accountant for the following reason! The IRS Code section states specifically that "Fees paid from the IRA to the investment advisor are not considered distributions of income and are not deductible for personal income tax purposes."

However, the IRS Code states that "if the owner of the account pays the fees directly with personal funds, they are deductible on Schedule A as a miscellaneous deduction subject to the 2% limitation."

The IRS wants the "IRA trustee or custodial fees" to be paid directly out of your own pocket in order to qualify as a miscellaneous itemized expense deductible."

Thus, it would be beneficial to you to directly pay for the advisory fees directly out of your brokerage account in order to obtain a deduction on your Schedule A, as a miscellaneous deduction subject to the 2% limitation.

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