Self-Directed IRA

Take Some of the Stress out of Tax Season with this Checklist

Any event will be stressful if you have not prepared for it properly. Tax filing season is no exception. It does not matter whether you do your taxes or hire a professional to file them for you, being prepared is the key to success for Self-Directed IRA investors.

Refer to the following checklist to ensure that you have everything you need to get started, keeping in mind that everyone’s tax situation is unique, and no single list can cover every tax payer’s needs.

But here are a few things to consider as you get ready:

Make your maximum Self-Directed IRA and Self-Directed HSA contributions

If you have not contributed to your traditional or Self-Directed IRA for 2018, you have until April 15th to do so. Just be careful because even though you are contributing in 2019, it’s for the 2018 tax year and those contribution limits apply.

The funds you deposit into an IRA can reduce the amount of taxes you owe, so if you do not have an existing Self-Directed IRA, you can open one before the April 15th deadline.

Another way to save on taxes is to fund your Health Savings Account (HSA). Just remember that you are only eligible for an Self-Directed HSA if you are enrolled in a high-deductible health plan.

You can also contribute to a Coverdell Education Savings Account (CESA) before the deadline. Although you may not deduct your contribution, the funds grow and are distributed tax-free as long as those distributions are not more than the designated beneficiary’s qualified education expenses.

Be aware of tax reform

The Tax Cuts and Jobs Act will affect your taxes this year. Income tax brackets and marginal tax rates have been modified, so you will need to study these changes to understand how the new tax laws will affect you. Even if you plan to use a tax professional, knowing the new rules will help you in your discussions and planning.

Consider a Self-Directed Roth IRA

Just as with a Traditional IRA, you can contribute to a Self-Directed Roth IRA for 2018 before the April 15th tax filing deadline. While there is no immediate tax deduction for a Roth contribution, all of those funds grow tax-free. When you withdraw the funds (after age 59½), they are also tax-free after the account has been established for five years.
Make sure you check out the contribution and income limits on a Self-Directed Roth IRA before contributing.

And keep in mind that a Self-Directed Roth IRA, just like a regular Self-Directed IRA, is available and can expand your investment choices considerably.

Other items on your checklist

  • Last year’s tax returns are helpful for comparison
  • W-2 forms sent from your employer
  • 1099 forms for different types of payments, including interest, dividends, contract work, and third-party payments
  • Deductions reduce your taxable income, which typically lowers your tax bill. Here are some of the most popular tax deductions:
  • Retirement account contributions (mentioned earlier)
  • Educational expenses for tuition, fees, and student loan interest
  • Medical bills that exceed 7.5% of your adjusted gross income
  • Property taxes and mortgage interest will be shown on Form 1098 from your lender
  • Charitable donations may be deducted with the proper receipts
  • Classroom expenses (up to $250) for educators who purchase classroom supplies
  • State and local taxes may be deducted including sales taxes
  • Credits are even better than deductions because they pay dollar-for-dollar. Here are a few to consider:
  • American Opportunity and Lifetime Learning credits will show up on Form1098-T if you are eligible
  • The standard Child Tax Credit is worth up to $2,000 per child for the 2018 tax year
  • Premium Tax Credit is for those who bought the Affordable Care Act coverage

Not everything on this list will be pertinent to you. So, be sure to modify it for your situation.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at

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