TAX PREPARATION VS. TAX PLANNING

Tax preparation is the process of preparing and filing a tax return. Generally, it is a one-time event that culminates in signing your return and finding out whether you owe the IRS money or will be receiving a refund.

For most people, tax preparation involves one or two trips to your accountant (CPA), generally around tax time.

Tax planning is a year-round process. Both individuals and business owners can take advantage of tax planning services, which we perform as a CPA Firm with in-depth experience and knowledge of tax law.

Examples of tax planning include the proper coordinating of bunching expenses to maximize deductions, how to use tax-loss harvesting to offset investment gains, increasing retirement plan contributions to defer income, and best timing for capital expenditures to reap the tax benefits. Good recordkeeping is also an important part of tax planning and makes it easier to pay quarterly estimated taxes, for example, or prepare tax returns the following year.

Tax planning is something that many taxpayers do not take advantage of - but should - because it can help minimize their tax liability by planning ahead. The tax benefit is usually worth the time.

If you're ready to learn more about what strategies (especially factoring in the new tax laws) you can use to reduce your tax bill next year, contact us at (973) 520-8123 or [email protected].