Let me begin by saying, I have a simple scenario. I have a loan used to buy common stock (Canadian bank stock) in order to earn dividend income.
However, when entering your personal tax profile, there is a section that mentions "You might be able to claim investment expenses." Within that section there is first a check box for "carrying charges" and then next one for "interest expenses".
When you look at the help for "carrying charges" by clicking on the definition, it contains the statement "interest on money borrowed to earn investment income (but not if the only earnings your investment can produce is capital gains). "
When you click on the help for "interest expenses" it states "most interest you pay on money you borrow, but generally only as long as you use
it to try to earn investment income, including interest and dividends."
For me, the above are the same. So the help does no good in understanding which one to pick. Hence, it would seem logical to pick the first one that seems to apply. In this case, "carrying charges".
However, when you get to your final review. TurboTax gives you a warning if you have borrowed money to earning dividend income, make sure that its classified as an "interest expense" on a "carrying charge".
At this point you say "huh?" Why does your help not state that?
When you look at "Schedule 4" and Line 221, it perhaps is a bit clearer when viewing the forms directly. But the EasyStep process along with the help and final review should not make things so complicated.
Comments please.
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