Tax Preparation Checklist

By Melissa Finnegan0 Comments
 
Tax season can be stressful, but it doesn’t have to be if you adequately prepare and have a plan to maximize your situation. Whether you file taxes yourself or work with a financial professional, review the Tax Preparation Checklist below for a basic outline of items you’ll need and ideas to consider as you prepare to file.

Review the checklist below before you start your tax return or meet with a tax professional to help make the process smoother and ensure you’re maximizing any potential tax savings.

Note: The following is a general checklist. Because every situation is unique, be sure to work with a financial or tax professional to review your specific goals and needs.


5 Things to Consider During Tax Time

1. Don’t Forget Last Year’s Tax Reform 

Although the Tax Cuts and Jobs Act was passed last year, this is the first year it will affect your taxes. With the new changes, it’s important to be mindful about how the new tax laws might impact you. Even if you work with a tax professional, understanding the new changes can aide in your discussions and planning.
 
The tax reform may affect the amount you receive in your tax refund, and some individuals may even owe money once they file their returns. Updates to income tax brackets and marginal tax rates, in addition to changes you may see in taxes withheld from your paycheck, were a few of the main changes from last year’s tax reform to be aware of as you prepare your taxes this year.
 
In addition, some changes will impact married couples. According to Dave Ramsey, “Not only will you have a lower tax rate this year, the shift in tax brackets also removes what used to be an unintentional tax penalty for married filers.”
 

2. Maximize Retirement Account Contributions for Potential Tax Deductions 

One way to potentially reduce the amount of taxes you owe for 2018 is to maximize your IRA contributions if you haven’t done so. Many people don’t know they are still able to contribute to a new or existing IRA for the 2018 tax year before the tax filing deadline on April 15, 2019.
 
Contributions to a tax-deferred account, like a Traditional IRA, may provide a tax deduction in the amount you contribute for that tax year (pending eligibility). Check the requirements outlined by the IRS to verify the amount you can contribute to a Traditional IRA for 2018 and if it can be deducted from your taxable income.

In addition to contributing to an IRA, contributing to another tax-advantaged account, such as a Health Savings Account (HSA), is another opportunity for potential tax deductions as long as IRS eligibility requirements are met. Keep in mind, you must be enrolled in a high deductible health plan to be eligible to open an HSA.


When considering a Traditional IRA, it’s possible to invest in assets beyond the stock market such as real estate, digital currency, precious metals and more with a self-directed Traditional IRA. Doing so allows your investments to grow potentially tax-deferred and offers the possibility of a tax deduction.

3. Explore Roth IRAs

If you make a 2018 contribution to a Roth IRA before the tax filing deadline on April 15, even if you open the account in 2019, it will not count toward your 2019 contribution limits. This lets you catch up on missed saving opportunities from 2018 and keeps open the ability to maximize your 2019 Roth contributions as well.

In terms of long-term tax savings, Roth IRA funds are contributed after-tax but grow tax-free. Furthermore, funds distributed from a Roth IRA after age 59½ are also tax-free after the account has been established for 5 years.

You may want to consider a Roth IRA if you exceed the MAGI limits to qualify for a deduction on your Traditional IRA contributions. Without a tax deduction, you may consider contributing to a Roth IRA (if you qualify). Be sure to talk with a financial professional to determine what is best for you.

Finally, when considering a Roth IRA, it’s possible to choose a self-directed Roth IRA to invest in assets outside of the stock market. Using a self-directed Roth IRA held with a passive custodian, such as Equity Trust, offers the opportunity to invest in a wide variety of assets (real estate, notes, precious metals, digital currency, etc.) in a tax-free environment.

4. Recognize Possible Saving Opportunities

If you realize you didn’t save as much as you hoped throughout 2018, there’s still time to save for retirement, healthcare and/or a child’s education in a potentially tax-advantaged environment. It’s still possible to open and contribute to an IRA, Health Savings Account (HSA) or Coverdell Education Savings Account (CESA) before the deadline on April 15, 2019. As mentioned, contributions before the deadline can be made for the 2018 tax year for any of the three accounts.

5. Know Your Contribution Limits

The contribution limits established by the IRS each year are applicable for any Traditional or Roth IRAs you have, regardless of where the accounts are held. Keep in mind, the maximum contribution limit includes all contributions per account type, whether it’s in one account or split amongst multiple accounts.

In addition to the checklist above, below are some basic items/documents you may need as you or your CPA prepare your tax return this year.

Items to Organize

The IRS offers a full checklist of documents you may need when filing taxes, but the following is a condensed list that will apply to most individuals. To speed up the process, it may be helpful to gather any/all documentation you might need before you start filing your tax return or meet with your advisor, CPA or tax professional.

Personal Information

  • Social Security Number – For you and your dependents
  • Proof of identification – Photo ID
  • Copy of last year’s tax return – Not required, but helpful to have as a comparison point
  • Bank account and routing number – If you plan on depositing your refund directly to your account

Income Information

  • W-2 forms – from all employers
  • 1099 forms – interest and dividend statements from banks


Equity Trust is a passive custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.