For many people, tax season simply means sending documents to a preparer and waiting for the return to be filed. But this annual ritual often gets confused with something far more valuable: tax planning.
So, what’s the difference?
Tax Filing Looks Back. Tax Planning Looks Ahead.
A tax preparer—whether a CPA, Enrolled Agent (EA), or even a software platform—is focused on reporting what already happened in the previous year. Think of it like a historian consolidating forms and deductions to file your personal or business return.
Tax planning, on the other hand, is forward-looking. It’s about making proactive decisions today that can minimize your tax liability in the future. Some strategies can help after the year ends—like last-minute retirement contributions—but their impact is limited compared to planning ahead throughout the year.
Here’s how to tell if you’re receiving tax planning:
If you’re only hearing from your tax professional once a year—typically right before your return is filed—it’s likely you’re not getting true tax planning guidance. And that means you could be missing out.
Real tax planning isn’t rushed in March or April. It’s an ongoing process of reviewing and implementing strategies throughout the year—strategies that can make a significant difference in what you ultimately pay.
Common Tax Planning Strategies Include:
- Tax-loss harvesting to offset investment gains
- Reducing exposure to concentrated stock positions
- Bunching deductible expenses to qualify for itemized deductions
- Optimizing retirement plan contributions
- Executing Roth conversions strategically
- And much more
At Azzad, our tax planning process is designed to uncover opportunities—and even spot potential mistakes your tax filer may have unintentionally made. We’ve seen cases where qualified charitable distributions, backdoor Roth contributions, or charitable lead annuity trust gifts were reported incorrectly, sometimes costing clients thousands.
Tax Refunds Aren’t the Full Picture
Let’s clear up a common misconception: Getting a big refund doesn’t necessarily mean your tax professional did a great job. In many cases, it simply means you overpaid throughout the year. Likewise, owing taxes doesn’t always signal a problem. Effective planning is about minimizing what you owe legally, not eliminating it entirely.
The Right Team Matters
Most tax preparers are swamped during filing season—and rightly focused on compliance. But comprehensive tax planning requires a different approach. That’s where a tax-focused financial planner can work hand-in-hand with your accountant to create an integrated strategy, especially if you’re self-employed or have significant income.
That’s the power of intentional planning.
Don’t Let Inaction Cost You
We know financial planning isn’t at the top of everyone’s to-do list. But as your income grows, so does the cost of inaction. Ignoring tax planning could mean paying more than you’re legally required to—and leaving less for your goals, family, and legacy.
At the end of the day, it’s not just about what you earn—it’s about what you keep.
Let us help you keep more.
