Tax liabilities can be minimized but cannot be eliminated. But what makes paying taxes worse is the surprise and unexpected pain it can create if the taxpayer is caught unaware. It’s terribly bad service if a CPA tells their client on April 13th to cut a $10,000 check to pay their taxes due on the 15th.
If managed and planned for properly, the surprise can be taken out of the equation. Yearend tax planning can inform the client in late December that he or she will owe $10,000 in taxes on April 15th. A client then has four months to plan for it accordingly. Tax planning can assist not just for April 15th but also for any quarterly estimated tax payments for the upcoming year due June, September and January 15th.
Tax planning is not just telling a client how much they owe and when to pay it. There are legitimate techniques and strategies that are available to reduce a person’s income tax liabilities. They are largely based on a person’s specific facts and circumstances as well as their risk adverse comfort level.
I normally don’t advocate one strategy or pursue an aggressive tax position. Part of my responsibility is to give my client both the advantages and consequences of the choices available. It’s their money; not mine. They should be comfortable with the decision that affects their money.