IRA Tax Services Warns Checkbook IRA Owners: Tax Exempt Does Not Mean No Tax Filing

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IRA Tax Services, Inc., a leading provider of tax document preparation services specializing in retirement accounts, wants to warn all owners of a Checkbook Control IRA- tax exempt does not mean exempt from all IRS rules and responsibility.

IRA Tax Services offers assistance with navigating the IRS and IRA rules and regulations, as well as tax documentation filing services.

IRA Tax Services, Inc., a leading provider of tax document preparation services specializing in retirement accounts, wants to warn all owners of a Checkbook Control IRA. Bill Humphrey, owner of IRA Tax Services, said, “If your IRA owns a Single Member LLC, then you, or the manager, usually does not have to file a Federal Tax Return for the entity. In fact if they do, it will probably result in a letter telling them not to file any return.” Humphrey explained that earnings for the IRA LLC entity are generally passed through to the owner of the LLC and are reportable through to the owner’s return.

However, said Humphrey, “In the case of an IRA owner, most people think the IRA is tax exempt, so nothing needs to be done. That is not the case!”

Commonly referred to as Checkbook Control IRAs or IRA-LLCs, these arrangements are frequently managed by the IRA owner. The owner frequently is not an IRA tax expert or accountant. The owner or manager may not realize, then, that even if the IRA LLC doesn't have to file a tax form,, the manager still needs to provide the owner with details about what transactions are passing through to the owner.

If that isn't complicated enough, depending on the type of income and/or losses passed through, the IRA itself may indeed need to file a tax return.

According to Humphrey, items such as net operating income, profits from debt-financed investments, and rental income from personal property will potentially result in the IRA having a tax filing obligation. Even when there is not a tax due, it can be beneficial to file to claim tax losses for the year.

Humphrey suggested to all Checkbook Control IRA owners, “Check with the manager of your IRA-owned entity to make sure they are reporting all the info needed to determine if the IRA has a filing requirement. Then make sure your have the appropriate tax filing prepared for your IRA.”

Humphrey also noted, ”Even though the LLC may not have a federal filing requirement, state laws may require annual reporting for by the entity itself.”

IRA Tax Services offers assistance with navigating the IRS and IRA rules and regulations, as well as tax documentation filing services.

About IRA Tax Services, Inc.

IRA Tax Services, Inc. is a leading provider of tax document preparation services to individuals and corporations who wish to include debt-leveraged investments in an IRA. IRA Tax Services specializes in tax document preparation for self-directed retirement plans, including IRAs (both Traditional and Roth), Checkbook Control IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s and other qualified plans.

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William Humphrey
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