Advisor Fees FY2018
In past years tax-deferred adviser fees paid from taxable account funds were IRS allowed itemized deductible expense. With new Tax Law, what is impact for reporting adviser fees?
In past years tax-deferred adviser fees paid from taxable account funds were IRS allowed itemized deductible expense. With new Tax Law, what is impact for reporting adviser fees?
Permalink Submitted by Mobey on Tue, 2018-04-17 15:38
No Misc Deductions subject to 2% of AGI on Sch A are allowed any longer.This means advisor fees, cost of tax prep, certain unreimbursed employee business expenses, etc.In reality, outside of a Roth, it’s a better tax advantage to deduct fees directly from IRAs as they are 100% paid with pretax money. For Roth still likely better paying out of non-qualified account despite the lack of ability to deduct as otherwise you’re using Roth money for fees. HTH
Permalink Submitted by Alan - IRA critic on Tue, 2018-04-17 16:51
I agree. Advisors should be breaking down their fees such that fees for the TIRA assets are directly deducted. But fees for other accounts including Roth IRAs cannot be deducted from a TIRA account, and should usually be paid from other funds or deducted from a taxable brokerage account. If advisor will not provide a breakdown, there is a risk that too much is deducted from the TIRA and that could result in a prohibited transaction.