Can we deduct the fees we paid to our financial advisor?

January 21, 2015 by Dave Du Val, EA
two people looking over financial charts

Hey Dave,

My wife has an IRA under professional management with a financial advisor here in Portland. Can we deduct the fees charged for his services in 2014 (the first year of her rollover from her 401K)? No withdrawals were made in 2014, but we did make a distribution on January 1, 2015.

Many thanks,

Sammy

 

Sammy,

The answer to this question is a bit convoluted. If the fees were paid from within the IRA, then the answer is a simple “no.” If they were paid with funds outside of the IRA, e.g., you wrote a separate check to the advisor, then the answer would be, “Yes, the fees are deductible as investment fees.” That said, this type of deduction is subject to a 2% floor, so there is only a deduction if you itemize, and then only to the extent that the total of all deductions subject to this floor exceed 2% of your AGI. Sorry there is not a simple yes\no answer, but that is often the case when it comes to taxes.

Deductibly Yours,

Dave

SEARCH

 

David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

Recent Articles

Man worried about money
Per the collection statute expiration date, the IRS generally has 10 years from the date they assess your tax balance to collect taxes owed.
Pennsylvania Flag on a pile of money
The PA Dept of Revenue expects you to make PA Estimated Tax payments if you make more than $9,500 of taxable income that has not had taxes withheld from it.
toy car next to 3 small houses and stacks of quarters
When you give assets to family members, they are subject to the gift tax exclusion amount, currently $17,000 per year. If your gift exceeds this amount...
Tax Penalty
If you can show that there was “reasonable” cause for the understatement or for failure to file or pay on time, you may be able to get those penalties abated.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.