Change to Expense Transactions


We have updated how categorizes investment club expenses.

Prior to 2018, IRS rules allowed certain taxpayers a tax deduction for Investment Expenses, but the Tax Cuts and Jobs Act of 2017 eliminated this deductibility. Even before that, these expenses were only deductible to taxpayers for any amount that exceeded 2% of their adjusted gross income (AGI), so most taxpayers and club members received no benefit from any investment expenses. (Current tax code does allow for the deductibility of interest paid on money borrowed to purchase taxable investments, such as margin loans for buying stock, however myICLUB does not support transactions related to borrowing money to purchase investments.)

As a result, we have re-labeled the types of expenses in to Investment Expense and Non-investment Expense (from Deductible Expense and Non-deductible Expense, respectively). Even though investment expenses are mostly no longer deductible for individual taxpayers, you should continue to differentiate expenses using these two categories.

You should record as an Investment Expense any of the following: service charges for dividend reinvestment plans, recordkeeping and software costs, tax preparation costs, research newsletters and subscriptions, membership in organizations such as BetterInvesting, office expenses (such as postage or making copies) incurred in connection with the club’s investments, meeting room rentals, and legal or accounting fees.

Non-investment Expenses include items that aren’t directly related to investing activities. These include food and refreshments served at meetings, gifts, flowers, get-well cards, and expenses in attending shareholder meetings, investing conferences or seminars.

For transactions and tax filings prior to 2018, the categorization of deductible vs. non-deductible expenses is especially important to maintain. It's still good practice to categorize expenses this way to help the club keep track of spending. In addition, the 2017 tax changes are set to expire in 2025, so it's possible that the deductibility of investing expenses could return,

The bottom line is that expenses directly impact your club’s returns, so keeping expenses low should be a priority.