TAX DEDUCTIONS FOR FINANCIAL ADVISOR FEES

The Tax Cut and Jobs Act has mostly eliminated the deductibility of financial advisor fees through 2025, and those affected are beginning to notice as strong investment market returns are correlating with an increase in these fees. Despite this, partner F. Michael Zovistoski noted that it is not all bad news for those hoping to take a deduction.

"For individuals who are currently paying large investment management fees and are truly obsessed with finding a way to make the investment fees tax-deductible, a renewed consideration should be given to investing in loaded, commission-based, actively managed mutual funds," said Zovistoski."When the mutual fund is ultimately sold, the commission is included in the cost basis, which in turn reduces the gain on the sale, again indirectly making the sales commission deductible."

Trust and business accounts also have a little lee-way under the current system."To the extent investment fees relate to business assets or a business purpose and are paid by the business, those fees continue to be deductible by the business," Zovistoski explained.

The other way to make the fees deductible is if a business owner is addressing specific business issues, such as succession planning, "those fees can be invoiced separately and paid by the business," he said.