Are Financial Advisory Fees Tax-Deductible? (Updated for TCJA)

Financial Advisory Fee

The miscellaneous itemized deduction is gone, but effective tax breaks remain.



Before 2018, you could partly or fully deduct investment advisory fees on your federal income tax return. When the Tax Cuts and Jobs Act was passed, however, the miscellaneous itemized deduction for investment fees and expenses vanished.1

This deduction seldom mattered for taxpayers in the highest brackets, as they could only deduct miscellaneous items on Schedule A once those expenses exceeded 2% of their adjusted gross incomes. Other investors took advantage of it; some, frequently.1

Are there any tax breaks relating to investment fees left? Sort of. While they are not formal tax deductions, they are certainly worth noting.

If you own a traditional IRA, you may effectively arrange a tax break. You can elect to pay the account fees right out of the IRA’s balance. In doing so, you are essentially giving yourself a tax deduction because you are paying the IRA fees with pre-tax dollars. (As a Roth IRA is funded with post-tax dollars, it makes no sense to pay Roth IRA account fees out of a Roth IRA balance.)1

Commissions linked to investment trades also basically constitute a deduction. A commission on an investment transaction effectively decreases an investor’s taxable gain – or alternately, increases an investor’s loss.1

Itemized deductions may still be claimed for fees paid for certain financial services. According to Internal Revenue Code Section 212, you are permitted to deduct expenses not associated with a business provided they directly relate to the production of income.2

What expenses meet this definition? Investment management fees charged to you by a Registered Investment Advisor (RIA). Tax preparation fees. Also, tax planning that is linked directly to the calculation or collection of a tax (whether in an income tax planning or estate planning context).2

How about financial planning fees or fees that financial professionals charge for per-project or hourly consulting? Unfortunately, none of these fees are directly connected to income production or investment transactions, so nothing like a deduction can be derived from these expenses.1

This is the reality through 2025. At that date, things may change, as the suspension of miscellaneous deductions under the Tax Cuts and Jobs Act may end. In the present, taxpayers have far less ability to deduct expenses linked to investing, asset management, and tax and financial planning.2




1 – [5/4/18]
2 – [3/7/18]


Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on print
Our Post Archives

Subscribe to our Newsletter

By subscribing to our mailing list you will always be updated with the latest news from us.  We never spam!

More Articles to Explore

gradual retirement

The New Gradual Retirement

  Do we really want to retire at 65? Not according to the latest annual retirement survey from the Transamerica Center for Retirement Studies which

Read More »

get in touch

  • 513-791-8899
  • 8160 Corporate Park Dr
    Suite 210
    Cincinnati OH 45242
  • Open in Google Maps

Weekly Newsletter

Get updates with our latest insights.  We never spam!

Stuff we have to say

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP (with flame logo)®, which it awards to individuals who successfully complete initial and ongoing certification requirements. CHARTERED RETIREMENT PLANNING COUNSELORsm and CRPC® are registered service marks of the College for Financial Planning®. DISCLAIMER: This web-site is for informational purposes only and does not constitute a solicitation or offer to sell securities in states where we are not licensed. Gary L Williams is licensed in the states of Ohio and Kentucky for securities, life insurance, and variable products. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this web-site should be interpreted to state or imply that past results are an indication of future performance. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY LINKED WEB-SITE. Some material on this website prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

© 2018 Gary L Williams. All Rights Reserved.

Gary L Williams Registered Representative, Registered Investment Advisory Associate
Securities and Investment Advisory services offered through Crown Capital Securities LP 8160 Corporate Park Dr Ste 210 Cincinnati OH 45242 513-791-8899 Member FINRA, SIPC