More often than not, smart people who want to make smart
choices with their money will choose to pay for expert financial advice and
help. This payment might come in the form of investment management fees or
financial planning fees, to name a couple.
The good news, however, is that this is certainly not money
spent in vain. First of all, as long as you’ve hired quality financial help,
you’re likely to have better managed finances and investments, which should
help your money to go further. Furthermore, many of these “money management”
fees that you’ll pay are tax deductible.
In many cases, money management fees can be counted as
miscellaneous itemized deductions, helping you to save on your tax return. The
only stipulation is that you can only deduct to the extent that these fee
exceed 2% of your adjusted gross income. As such, this may mean that you can’t
deduct all of your money management fees, but really, being able to deduct
something is always better than nothing!
If you don’t quality for a basic deduction as described
above, don’t worry; you still have other options for saving big! If, for
example, the fees you’ve paid are structured as a percentage of your assets,
you can pay for fees out of the correlated account, which will likely be
counted as a tax-free withdrawal. Of course, this can vary from one type of
account to the next, but if your account qualifies for tax-free withdrawals, go
for it!
Even if none of these options apply in your situation and
with your specific fees, many accountants and other professionals know special
loopholes and other legal ways to save you money or save you from spending any
of your own money on money management fees, so definitely don’t hesitate to
ask. After all, what’s the point of having a financial professional on your
side if you can’t get advice when you need it!?