Both compliance and planning are crucial steps in making sure that your tax returns have been
filed correctly and efficiently—but what exactly do they both mean? Naturally, compliance takes
place while returns are being filed to ensure that taxes have been filed in such a way that complies
with local, state, and federal tax requirements. Tax planning, on the other hand, starts before tax
season and involves planned minimization of taxation.
What’s the Difference?
Compliance takes place around tax season—whereas tax planning typically takes place in the
taxable year. It requires thinking ahead to maximize tax minimization by incorporating money-
saving strategies into your overall tax plan.
A tax plan consists of legal ways to cut down on tax liabilities, and necessitates having a good
understanding of your tax situation and the tax laws you’re governed by. In addition, these plans
also require projections for the next tax year that take business and personal tax liabilities into
Also, whereas tax compliance is obviously required, tax planning is only recommended as
something that can have an incredible impact on take-home income. An experienced CPA will
know to take a look at your present and past tax situation and be able to form an accurate and
valuable projection of your next tax year.
To ensure that your taxes are compliant—and that your tax plan maximizes returns—contact
Atherton & Associates, LLP.