What’s the Difference Between Tax Preparation and Tax Planning?
Tax preparation refers to the process of filing your taxes. To ensure you pay the correct amount to the government, you must fill out the information on your tax return accurately. Any mistakes could result in under- or over-reporting what you owe. Over-reporting needlessly increases your tax liability, while under-reporting runs the risk of owing back taxes and the associated interest and penalties. Tax preparation season runs from January 1 to April 15—the day taxes are due.
On the other hand, tax planning is vital all year round. It guides your financial decisions from January through December, attempting to reduce your liability when the time comes to file your taxes. Not many Certified Public Accountants (CPAs) or tax programs provide tax planning—just tax preparation. Working with a tax-skilled Certified Financial Planner (CFP) at Financial Consulate can help you:
- Construct a tax-efficient portfolio
- Maximize your retirement contributions
- Make the most of a Roth IRA
- Use a medical savings account to the fullest
- Know when to add or remove dependents on a tax return
- Strategize for the American Opportunity Tax Credit
- Maximize and protect business deductions
- Optimize your charitable contributions
- Know when and when not to itemize your deductions
On top of these tax planning services, we can also assist with tax preparation to ensure you report your liability correctly on your state and federal tax returns.
To request expert tax advice in Gettysburg, PA and Hunt Valley, MD, please contact Financial Consulate at 877-823-7283.