CHAPTER 12

Deductions from Investment Income

Deduct Your Investment Expenses from Your Income, Even from Ordinary Income

As the saying goes, “It takes money to make money.” With investments it is no different. The good news is that there are several opportunities available to reduce your income by deducting your investment expenses, and there are even a couple tax credits available as well. In this chapter I focus on five categories of opportunities for tax deductions and credits that come from investments:

  • Investment interest
  • Withdrawal penalties
  • Foreign tax credit
  • Miscellaneous deductions
  • Professional trader status

Investment Interest

At times investors borrow money in order to make an investment. This is done most commonly in “margin” accounts ...

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