As others have stated, margin interest is tax deductible. I use HR Block tax software and it asks for “Investment Interest Expense”, which flows to Schedule-A, line 14 (for 2013). I assume TurboTax and the others are the same. But remember that your *total* Schedule-A deductions must be greater than your Standard Deduction for it to even matter.
Others have also expressed opinions against using margin. I have learned (the hard way) that those negative opinions have merit. Margin is like afterburners on a fighter jet – you get a thrilling ride if you use them on the way up and really deep hole if you use them on the way down. I still use margin regularly – but much differently than in the past – and employ the following rules… (1) Think like a sniper – move in, take your shot and escape with a profit. (2) You better be damn sure you’re right. (3) If you’re not right, exit the position like your hair is on fire. Since I don’t have any hair, I exit like my pants are on fire. (4) Hold the position only as long as it’s moving your way. For me, that’s typically no more than a couple of days. I start #$%$ in my pants at about the 1-week point. A stalled position is also cause for exit. (5) Limit the margined positions to only one or two and watch ‘em like a hawk – particularly the open and close action.
As always… your mileage may vary – and past performance is not a guarantee of future results – and my opinion + 25 cents is worth about 25 cents.