* My posting “In Never Never Land” from ANYTHING BUT TAXES is included in the "Everything Else Finance" section of “Carnival of Everything Finance #8 - Investment Education Edition” compiled by Blain Reinkensmeyer at STOCK TRADING TO GO. The Carnival covers investing tips, tricks, picks, and education from market professionals and also includes 10 great ways to learn investing in the stock market. The Carnival contains lots of interesting posts. Check it out!
* Congress is back today for a short 3-week session before adjourning for the year. The Democrats assure us that the dreaded AMT will be dealt with during this time.
The Tax Foundation’s TAX POLICY BLOG quotes “CongressDaily AM” as reporting:
“Majority Leader Reid and Minority Leader McConnell will likely reprise talks toward reaching a consent agreement that would limit amendments and allow debate on a substitute that patches the AMT for one year, and extend for two years a range of expiring business tax provisions.
House Democrats are still insisting on fully offsetting the AMT patch, though their Senate counterparts have basically conceded that pay-as-you-go requirements will have to be waived for the AMT portion.”
* The National Association of Tax Professionals “Tax Tip of the Week” reports:
“With the end of the year fast approaching, your clients with IRAs may be receiving notices or statements from the account trustees regarding fees on the account. These fees can be paid directly from the IRA assets or by the IRA owner from personal funds. The deductibility of these fees for income tax purposes depends on which method is used to pay the fees.
If billed separately and paid by the individual, the fee is deductible by the individual as a miscellaneous itemized deduction (subject to the 2% of AGI limit) on Schedule A. If the fees are paid out the IRA assets, the fees may not be deducted by the taxpayer.”
Two comments –
(1) It is very important to remember that (a) if you cannot itemize or (b) if you can itemize, but your total miscellaneous job and investment related expenses will not exceed 2% of your Adjusted Gross Income (AGI) you will receive no tax benefit from paying your IRA management fees separately.
(2) By paying your IRA fees separately with “current” funds (i.e. your checking account) and not having the charge automatically withdrawn from the funds in your IRA account you will increase the amount of money that will accrue in your IRA and be available at retirement. This is especially good if you have a ROTH IRA, as the accrual is totally tax-free.