Tax Preparation Versus Tax Planning, What's the Difference?

When looking for a tax professional, it is important to know the difference between tax preparation services and tax planning services. You may be surprised to note that they are completely different services. If you require a tax planner along with a tax preparer, be sure to ask for the combination of both these services. 

Do You Know the Difference Between Tax Preparation Services and Tax Planning Services?

Everyone's worst nightmare— a nasty surprise from Uncle Sam. People hire a tax professional for many reasons, but the main reasons are to ensure that they are tax compliant and to find ways to plan their taxes in a manner that will help them capitalize where they can and to save on costs that can be avoided. You can reap extra benefits while avoiding fines and penalties by hiring a professional tax preparer or a tax planner to assist you with your finances— giving you peace of mind.

What is Tax Preparation?

In simple terms, tax preparation is a service that assists you with filing your tax returns each tax year. The main aim of tax preparation is to make sure that you are complying with state and federal tax laws.

Why Do I Need Tax Preparation?

Filing your taxes can be tricky if you are not up to date with current legislation. It can take up a chunk of your time, leaving you feeling uncertain and stressed out. In recent years new laws have been put in place that you may not be aware of. Professional tax preparers are trained in tax compliance and have a solid knowledge of all tax laws. Make sure that the person you hire is fully qualified and experienced, such as a CPA or a trusted financial advisor.

What is Tax Planning?

Tax planning is a service that helps a taxpayer optimize the outcome of their tax situation by planning and putting strategies into place. Tax planning can be simple or complex, depending on your financial situation. Tax planning is a long term service that will have you prepared long before tax season hits. This is done months before your taxes are filed. A professional tax planner will use current tax legislation to your advantage by offering and explaining the different ways you can benefit by taking specified steps. 

Why Do I Need Tax Planning?

While some people can handle their own tax planning, for others it may be more complex. When deciding on hiring a professional tax planner, ask yourself the following questions:

• Do I want to maximize my charitable deductions in a way that is tax efficient?
• Do I require knowledge on how to manage my tax bracket? 
• Am I able to use tax loss harvesting to offset my investment gains?



Professional tax planners offer advice on all this and more‐ they take actionable steps towards helping you achieve your financial goals. These include everything from managing the tax on your investments, retirement plans and trust funds, to qualifying for a bigger mortgage. A professional tax planner not only has in-depth knowledge of both state and federal tax legislation, they are expert strategists. If you want your finances to flourish then a professional tax planner is what you need.

How Do I Find a Reliable Tax Practitioner?

Tax preparation services and tax planning services are both beneficial to your financial wellbeing. Tax planning usually involves several meetings and lengthy discussions about your long term goals and plans for your wealth. Make sure that you choose a person that you are able to speak openly with—someone who comes with excellent testimonials. Whatever you decide on, it is always advisable to take extra precautions. Do your research to ensure that the person is not only qualified but is trustworthy and reliable before letting them handle your taxes and financial decisions.

Tax planning and tax preparation does not have to be an intimidating and stressful experience. Our tax practitioners will equip you with the information you need to protect your wealth. Our trusted advisors will always keep you in the loop. We offer top rated tax preparation services as well as tax planning services. Get in touch with us today.