Tax Preparation

Tax preparation is typically a one-time process. Your certified public accountant (CPA) will prepare your tax return for filing by the tax deadline. Most individuals undergo tax preparation from January through April. Tax preparation requires documents to complete your tax return, including income documentation, investment documents, and retirement plan statements.

Why use a CPA for tax prep?

• Saving more money. Tax professionals understand tax laws and tax compliance. They know how to maximize your deductions and tax credits so you keep more money in your pocket.
• Saving time. Completing your tax return independently takes a lot of time and effort. A tax professional could save you as much as 20 hours. You need to spend an hour or two with your tax professional, but they handle the rest.
• Fewer errors. Erroneous tax returns can be devastating. Errors put you at risk for audit and penalties. When a tax professional prepares your tax filing, their guarantee that they followed tax laws lowers your risk for audit.

Tax Planning

Different from tax preparation, tax planning is creating strategies to minimize your tax liability. Executing strategies that minimize your tax burden is a year-round process, not something you do right before the tax due date.

When you work with a tax planner, they consider current tax laws, new tax laws and regulations, and your current situation. They aim to prepare individuals for the lowest tax liabilities while staying within the current tax regulations.

Why use a CPA for planning?

• Lowering tax liability. Essentially, reducing your liability for income tax and any investment gains or wealth tax is the primary goal when working with a tax planner. Planning throughout the year, especially when you have business income, ensures you take advantage of the right tax credits, use tax-loss harvesting techniques in your investments, and manage your wealth accordingly.
• Ensuring estate planning flexibility. Just leaving money for your heirs isn’t enough. You may feel good about what you’re leaving them, but you may not realize how you could complicate their tax situation. Tax planning ensures you lower your own tax liability but the tax liability of your heirs.
• Understanding your investment returns. Capital gains, expenses, and even inflation can ruin your carefully thought-out investment planning, leaving you with much less than you anticipated.