Form 4952: Investment Interest Expense Deduction
Form 4952: Investment Interest Expense Deduction is a tax form distributed by the Internal Revenue Service (IRS) used to determine the amount of investment interest expense that can be deducted, as well as any interest expense that can be carried forward to a future tax year. According to the IRS, the following instances serve as exceptions to filing the form: If the investment interest expense is less than your investment income from interest and ordinary dividends minus any qualified dividends. If you don't have any other deductible investment expense. There is no carryover of disallowed investment interest expense from the previous year. Form 4952: Investment Interest Expense Deduction is a tax form distributed by the Internal Revenue Service (IRS) used to determine the amount of investment interest expense that can be deducted, as well as any interest expense that can be carried forward to a future tax year. IRS Form 4952 determines the amount of deductible investment interest expense as well as interest expense that can be carried forward. The IRS limits the investment interest expense deduction to the taxpayer's net income from an investment.
What Is Form 4952: Investment Interest Expense Deduction?
Form 4952: Investment Interest Expense Deduction is a tax form distributed by the Internal Revenue Service (IRS) used to determine the amount of investment interest expense that can be deducted, as well as any interest expense that can be carried forward to a future tax year.
The IRS has different rules taxpayers must follow depending on where the interest comes from and whether it is investment, personal, business, or mortgage-related. If an investor pays or accrues interest on a loan and then uses the proceeds for several different purposes, the taxpayer may have to allocate the interest to ensure that the right interest rule is used.
Who Can File Form 4952: Investment Interest Expense Deduction?
Form 4952: Investment Interest Expense Deduction must be filed by individuals, estates, or trusts seeking a deduction for investment interest expenses. That means if you borrow money for an investment, you may be able to get a tax break. You can claim the interest on the investment as a deduction. Interest income may result from money borrowed specifically to purchase investments like parcels of land, commercial or residential investment properties, stocks, and non-tax-exempt bonds.
How to File Form 4952: Investment Interest Expense Deduction
There are three parts to Form 4952:
The final figure from Part III is transferred to line 9 of Schedule A.
Form 4952 is available on the IRS webpage.
The IRS limits the investment interest expense deduction to the taxpayer's net income from an investment.
Exceptions That Don't Qualify for Form 4952: Investment Interest Expense Deduction
According to the IRS, the following instances serve as exceptions to filing the form:
In addition, the following investments do not qualify:
Related terms:
Accrue
To accrue means to accumulate over time, and is most commonly used when referring to the interest, income, or expenses of an individual or business. read more
Form 4562: Depreciation and Amortization
Form 4562: Depreciation and Amortization is an Internal Revenue Service (IRS) tax form used to depreciate or amortize property purchased for use in a business. read more
Form 8396: Mortgage Interest Credit
IRS Form 8396: Mortgage Interest Credit is used by homeowners to claim the mortgage interest credit, but you can only claim it if you receive a mortgage credit certificate. read more
Form 1098: Mortgage Interest Statement
Form 1098 is an IRS form used by taxpayers to report the amount of interest and related expenses paid on a mortgage during the tax year when the amount totals $600 or more. read more
Investment Interest Expense
If proceeds from a loan are used to invest in stock, the interest paid on the loan is called an investment interest expense. read more
What Is the Internal Revenue Service (IRS)?
The Internal Revenue Service (IRS) is the U.S. federal agency that oversees the collection of taxes—primarily income taxes—and the enforcement of tax laws. read more
Itemized Deduction
Itemizing deductions allows some taxpayers to reduce their taxable income, and thus their taxes, by more than if they used the standard deduction. read more
Qualified Dividend
A qualified dividend is a type of dividend subject to capital gains tax rates that are lower than the income tax rates applied to ordinary dividends. read more