In the final days of 2017, Congress enacted sweeping changes to the federal tax code as a part of the Tax Cuts and Jobs Act. Among these changes is a provision that we believe unfairly disadvantages you as an investor: deductibility of advisory fees.
Under the Tax Cuts and Jobs Act, you are no longer able to take an itemized deduction for investment advice expenses. In the past, you were able to deduct fees paid for advisory services, subject to certain income limitations. The ability to deduct advisory fees reduced your overall tax obligation and, in effect, reduced your cost of investing. The new law effectively raises the cost of advice to those of you who could deduct advisory fees in the past.
Although it’s unlikely Congress will revise the legislation this year, there may be opportunities for future consideration. We encourage you to act now to raise awareness among lawmakers about the negative consequences of these provisions. TD Ameritrade is a leading advocate for investors and independent registered investment advisors (RIAs), like HIGHLAND. They have prepared a template letter you can personalize and send to your state representatives seeking the restoration of advisory-fee deductibility. Please visit TD Ameritrade’s Advocacy Action Center and click on the “Take Action” link at the bottom of the page.