One of the fundamental ways you can make money in the stock market is by buying low and selling high. If you sell your stock for more than you paid for it, you have a profit. The Internal Revenue Service considers this profit to be a taxable capital gain. You can reduce the amount of your taxes by deducting certain expenses associated with investing, but you can't deduct transactions fees.

The IRS does not allow you to write off transactions fees, such as brokerage fees and commissions, when you buy or sell stocks. Instead, you can add the amount of those fees to the purchase price of your stock. The purchase price plus the cost to acquire your stock equals your cost basis. You can also reduce the amount you received from selling your stock by the amount of your transaction fees.

Day Trading Expenses You Cannot Deduct from Your Income Taxes - dummies

Even though you can't deduct your transaction fees, you can reduce your taxable gain, or increase your taxable loss, by properly figuring your cost basis.

While you can't deduct your stock transaction fees, you can deduct certain other expenses associated with producing investment income. For example, you can write off the expense of paying for a safe deposit box if you use it to keep stock certificates or other investment-related documents.

You can deduct legal fees and fees for professional advice relating to your investments.

The cost of financial publications and investment newsletters is tax-deductible. You can also write off fees to financial institutions or trustees for collecting your investment income. You can write off travel expenses to look after your investments or to seek advice from your investment counselor, but that perk does not extend to attending investment seminars or conferences.

Travel expenses for attending a company's annual stockholders' meeting are also not tax-deductible, even if you own stock in the company. You'll have to itemize your deductions if you want to write off your investment-related expenses.

Include these expenses with your other miscellaneous itemized deductions on Schedule A. The amount of your deduction for all of your miscellaneous expenses is limited to the amount that exceeds 2 percent of your adjusted gross income.

Don't include transaction fees with your other miscellaneous deductions. Include them with your cost basis when you report your stock sales. Mike Parker is a full-time writer, publisher and independent businessman.

Investment Expense Tax Deduction - Which Fees Can You Deduct?

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Visit performance for information about the performance numbers displayed above. Skip to main content. Are Stock Transaction Fees Tax-Deductible? More Articles Are Stock Commissions That Are Paid Tax Deductible on Your IRS Filing? How to Figure How Much Tax Is Owed on a Stock You Sold How Do I Identify Stock Lots to Sell?

Trading Account Fees How to Lock in Stock Profits Types of Convertible Bonds. Cost Basis The IRS does not allow you to write off transactions fees, such as brokerage fees and commissions, when you buy or sell stocks.

Deductible Investment Expenses While you can't deduct your stock transaction fees, you can deduct certain other expenses associated with producing investment income. Other Non-Deductible Expenses You can write off travel expenses to look after your investments or to seek advice from your investment counselor, but that perk does not extend to attending investment seminars or conferences.

Reporting You'll have to itemize your deductions if you want to write off your investment-related expenses. Writing Off Your Investment Costs California Society of CPAs: Deductible Investment-Related Expenses Internal Revenue Service: Publication , Stocks and Bonds Internal Revenue Service: Topic - Traders in Securities.

Resources 1 Internal Revenue Service: About the Author Mike Parker is a full-time writer, publisher and independent businessman.

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