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?
What is Tax Compliance?
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.
What is Tax Planning?
Tax planning, on the other hand, starts before tax season and involves planned minimization of taxation.
What’s the Difference Between Tax Compliance and Tax Planning?
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. Also, whereas tax compliance is obviously required, tax planning is only recommended as something that can have an incredible impact on take-home income.
What Does a Tax Plan Consist Of?
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 account.
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.