What Is Tax Planning?

Tax planning is the process of organizing your finances to minimize your tax bill — legally. It involves strategies like maximizing retirement contributions, timing income and deductions, choosing the right filing status, and taking advantage of available credits. Good tax planning happens year-round, not just at filing time. The difference between tax planning and tax evasion is legality — tax avoidance is legal, tax evasion is not. A good tax professional is a year-round resource, not just a once-a-year preparer.