Are you one of the countless filers out there whose tax situation has recently evolved? You’re probably confused about the differences between tax planning and tax preparation services. Luckily, the best tax preparation firm in Weston is here to show you why the two are pretty different.
Tax planning refers to the effective management of a taxpayer’s financial situation. This is a year-round process that aims to minimize the tax burden at the federal and state level for the short and long term. In most cases, tax planning is performed by a CPA, accounting firm, or an Enrolled Agent (EA) who’s an expert in tax law.
This type of service can be as simple as ensuring that a taxpayer has sufficient withholdings to steer clear of tax estimate underpayment penalties. However, it can also be as complex as planning for a capital liquidation event.
Moreover, long-term tax planning usually involves ongoing discussions with the taxpayer regarding their long-term goals and what they intend to accomplish with their wealth. Likewise, tax planning can also require working with families to capitalize on the higher estate tax exemption.
Tax preparation refers to a one-time event that involves preparing and filing a tax return. It culminates in signing your return and determining whether you owe the IRS money or will be getting a refund. In most cases, tax preparation will require you to hand over financial documents necessary for the preparation and signing of your tax return.
The CPA, EA, or attorney is responsible for ensuring that the tax reporting on your return meets the terms stated in the federal and state tax laws. While some taxpayers decide to prepare their tax returns and file them with the IRS, hiring a tax professional helps them save time and avoid costly mistakes.
At TaxCPA1, we’re committed to providing high-quality service for what you want, need, and deserve. Contact our office today if you want to learn more about tax planning and tax preparation.