We are Accountants in Chicago and we were recently asked the following question by a client of ours.
Which is the best solution for the investment? Should Investments Be Kept In A Safe Deposit Box? Is the cost of Safe Deposit box tax deductible?
Depending on the investment it could be a good idea to keep our investments in a safe deposit box. Certainly, some investments definitely require this sort of protection, such as rare coins, stamps, and similar collectables, gold and silver, and negotiable instruments, such as bearer bonds that can be cashed by anyone who possesses them. The cost of renting the box isjustifiable for keeping these items safe.
When we talk about stock certificates and other such proof of ownership, the need is less critical since these can be replaced, but the delay and inconvenience of replacing them may warrant safeguarding them as well. Although less critical, many individuals feel the need to also include insurance policies, deeds, birth certificates, wills, trust documents, etc., in their safe deposit box. If you do include the originals of these documents in the lockbox, be sure to make digital copies or photocopies for everyday reference. It is also important that the individual(s) you designate to handle your affairs in case of death or incapacity has a list of your investments and important documents and knows where they are kept.
However, if you do rent a safe deposit box to store valuables, you may wonder, is the cost a tax deduction? For Individual Income Tax Return, the answer is YES if the box is used to store taxable income-producing stocks, bonds, or investment-related documents, if you itemize your deductions, and if the box rental plus other “miscellaneous” deductions exceeds 2% of your adjusted gross income. The answer is NO, when you prepare your Individual Income Tax Return, if you use the safe deposit box only to store jewelry or other personal items or for tax-exempt securities.
Call CPA in Chicago, Illinois at 773-728-1500 for questions regarding Individual Income Tax and the appropriateness of Tax Deductions.