Against what income are broker fees deducted?
"You don't ""deduct"" transaction fees, but they are included in your cost basis and proceeds, which will affect the amount of gain/loss you report. So in your example, the cost basis for each of the two lots is $15 (10$ share price plus $5 broker fee).  Your proceeds for each lot are $27.50 (($30*2 - $5 )/2).  Your gain on each lot is therefore $12.50, and you will report $12.50 in STCG and $12.50 in LTCG in the year you sold the stock (year 3).   As to the other fees, in general yes they are deductible, but there are limits and exceptions, so you would need to consult a tax professional to get a correct answer in your specific situation."
The commission is per trade, there is likely a different commission based on the type of security you're trading, stock, options, bonds, over the internet, on the phone, etc.  It's not likely that they charge an account maintenance fee, but without knowing what kind of account you have it's hard to say. What you may be referring to is a fund expense ratio.  Most (all...) mutual funds and exchange traded funds will charge some sort of expense costs to you, this is usually expressed as a percent of your holdings.  An index fund like Vanguard's S&P 500 index, ticker VOO, has a small 0.05% expense ratio. Most brokers will have a set of funds that you can trade with no commission, though there will still be an expense fee charged by the fund. Read over the E*Trade fee schedule carefully. I would say it's all relative. Take the following two scenarios: If you were facing these options, would you chose #2 just because you pay a lower tax rate, even though you make less money? These numbers are of course fictional, but the point I'm trying to make is that everyone will seek the method that allows them to make the most money. If they have to pay a higher tax rate, so be it. One other thought: daytraders will have higher expenses, which are deductible. Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year.  The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement.  Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored. Brokers will have transaction fees in addition to the find management fees, but they should be very transparent. Brokering is a very competitive business.  Any broker that added hidden fees to their transactions would lose customers very quickly to other brokers than can offer the same services. Hedge funds are a very different animal, with less regulation, less transparency,  and less competition. Their fees are tolerated because the leveraged returns are usually much higher. When times are bad, though,  those fees might drive investors elsewhere. It is not your brokerage's responsibility to tell you **what** to buy, whether explicitly, or implicitly through their fee structure.  This is **not** an article about Robin Hood.  It's an argument condemning all active investing with repeated mostly-irrelevant mentions of Robin Hood as one of the hundreds of entities that makes that possible. I received a $2,000 bonus... Gross Income is income from whatever source derived, including (but not limited to) “compensation for services, including fees, commissions, fringe benefits, and similar items.”  Adjusted Gross Income is defined as gross income minus adjustments to income.  My question is, must I still report this money on my tax return and if so, how? Yes, and it would be on line 21 of your 1040 with supporting documentation. Are these legal fees deductible as an expense, and where would I list them? Yes, you would aggregate your deductible expenses and place these on your Schedule A. Instructions here. Good Luck. Edit: As Ben Miller pointed out in the comments, the deduction would be placed in either line 23 or 28 depending on the nature of the attorney (investment related or not). Typically that applies if the broker Form 1099-B reports an incorrect basis to the IRS.  If the Form 1099-B shows incorrect basis relative to your records, then you can use 8949, column (g) to report the correct basis.  The 8949 Instructions provide a brief example. http://www.irs.gov/pub/irs-prior/i8949--2013.pdf Although you have an obligation to report all income, and hence to report the true basis, as a practical matter this information will usually be correct as presented by the broker.  If you have separate information or reports relating to your investments, and you are so inclined, then you can double-check the basis information in your 1099-B. If you aren't aware of basis discrepancies, then the adjustments probably don't apply to you and your investments can stick to Schedule D. You can deduct retirement contributions (above the line even), but not as a business expense. So you can't avoid the SE taxes, sorry. There is a LOT of shuffling going on in the financial services industry. I would not immediately say your advisor is acting in bad faith. The DOL fiduciary changes are quite significant for some brokers. Investment Advisors who are fee-based have less of an impact since they are already fiduciaries. That being said, your issue is still the same. How can you get a low-cost solution to your problem? You might want to consider Vanguard, Fidelity, or another mutual fund company that can keep your costs low. However, you should understand that if you are using mutual funds, the fees are paid one way or another. 12b1 fees, commissions, and expenses are all deducted from the fund's gross returns.  You have to choose between low cost and paid advice. you cannot get high-quality low-cost advice. Fortunately, there are a lot of new solutions out there, robo-advisors, indexing, asset allocation mutual funds, ETFs, and more. Do a bit of homework and you should be able to come up with a reasonable solution. I hope you found this helpful. Kirk I am an Israeli based citizen who represents and Indian company who sells its products in Israel. As an agent I am entitled to commission on sales on behalf the Indian company who advised that. Any commission paid to you will be applicable to TDS at 20.9% of the commission amount, the tax will be paid and a Tax paid certificate will be given to you.   According to a Bilateral Double tax avoidance treaty if the tax has been deducted in India you will get credit for this tax in Israel. If you have made $33k from winning trades and lost $30k from loosing trades your net gain for the year would be $3k, so obviously you would pay taxes only on the net $3k gains. First of all, this is a situation when a consultation with a EA working with S-Corporations in California, CA-licensed CPA or tax preparer (California licenses tax preparers as well) is in order. I'm neither of those, and my answer is not a tax advice of any kind. You're looking at schedule CA line 17 (see page 42 in the 540NR booklet). The instructions refer you to form 3885A. You need to read the instructions carefully. California is notorious for not conforming to the Federal tax law. Specifically, to the issue of the interest attributable to investment in S-Corp, I do not know if CA conforms. I couldn't find any sources saying that it doesn't, but then again - I'm not a professional. It may be that there's an obscure provision invalidating this deduction, living in California myself - I wouldn't be surprised. So I suggest hiring a CA-licensed tax preparer to do this tax return for you, at least for the first year. This is taxed as ordinary income. See the IRC Sec 988(a)(1). The exclusion you're talking about (the $200) is in the IRC Sec 988(e)(2), but you'll have to read the Treasury Regulations on this section to see if and how it can apply to you. Since you do this regularly and for profit (i.e.: not a personal transaction), I'd argue that it doesn't apply. In my experience they charge you coming and going. For example, if a brokerage firm is advertising that their commissions are only $7/trade, then that means you pay money to buy the stock, plus $7 to them, and later on if you want to sell that stock you must pay $7 to get out of the deal.  So, if you want to make any money on a stock (say, priced at $10) you would have to sell it at a price above $10+$7+$7=$24. That kind of sale could take a few years to turn a profit. However, with flat-rate fees like that it is advantageous to buy in bulk. "New SEC rules also now allow brokers to collect fees on non-dividend bearing accounts as an ""ADR Pass-Through Fee"". Since BP (and BP ADR) is not currently paying dividends, this is probably going to be the case here. According to the Schwab brokerage firm, the fee is usually 1-3 cents per share. I did an EDGAR search for BP's documents and came up with too many to read through (due to the oil spill and all of it's related SEC filings) but you can start here: http://www.schwab.com/public/schwab/nn/m/q207/adr.html"