Tax Planning vs. Tax Preparation: Why Most Taxpayers Miss Out on Savings
When most people think about taxes, they think about paperwork and hoping for a refund. But with forward-focused tax planning, you can transition from reacting to your tax bill to actively reducing it by design.
At ML Tax and Bookkeeping, we don’t just prepare tax returns, we offer tax planning as a defined deliverable. We craft customized strategies, quantify their savings, and deliver them in dollars, not just ideas.
What Is Tax Planning?
Tax planning is a proactive, forward-looking review of your income, investments, business decisions, and life changes before year-end. Its goal is to identify and execute legal opportunities that lower your tax liability today, and set you up for success tomorrow.
Why It Pays to Act Early
Tax planning isn’t a late-season sprint, it’s a strategic season-long process. Once December 31 arrives, most opportunities are gone. Tax preparers who only show up to file returns are reactive, while planners who work with you during the year are proactive, and that makes all the difference.
Core Tax-Planning Strategies, And What They Save You
Here are strategies we use regularly, and how we quantify their impact:
1. Real Estate Investors: 1031 Exchanges
Defer capital gains taxes by swapping one investment property for another. We model your potential tax owed now vs. deferred, showing actual dollars you’ll save.
2. Business Owners: Leverage + Accelerated Depreciation
Use debt financing with accelerated depreciation (Section 179 or bonus depreciation) to maximize deductions now while extending your debt payback schedule.
We calculate how much tax is saved in year one vs. future years.
3. Retirement Plans
Contributions to Solo 401(k)s, SEP IRAs, or other plans not only reduce your current AGI but they also provide immediate, quantifiable tax savings. For instance, contributing the full Solo 401(k) amount ($69,000–$76,500 in 2025 with catch-up) could save you tens of thousands today.
4. Qualified Business Income (QBI) Deduction
Pass-through business owners can deduct 20% of qualified business income, but only if structured correctly. We model wages vs. distributions to identify the optimal tax scenario for you.
5. State & Local Tax (SALT) Planning
Recent laws bump the SALT deduction cap from $10K to $40K and allow clever use of entity-level deductions or trusts to bypass caps. We assess whether PTE taxes or multiple non-grantor trusts can increase your deductions.
6. Capital Gains Timing
Choose which assets to sell and when. Using tools like tax-loss harvesting, like-kind exchanges, Opportunity Zones, or QSBS exclusions, we design a strategy to defer and minimize capital gains tax — with projected savings shown.
7. Charitable Giving Tactics
We build lasting giving plans, like donor-advised funds or bunching, that maximize deductions while aligning with your values.
8. Retirement Account Conversions
If you’re in a low-bracket year, converting a Traditional IRA to a Roth can minimize long-term taxes. We simulate the immediate tax and future benefits.
Less Common But Powerful Strategies
- Mergers & Acquisitions: We quantify the tax differences between stock vs. asset deals — from depreciation benefits to capital gains treatment.
- Trust-Based SALT Planning: High-net-worth clients can leverage non-grantor trusts to multiply SALT deductions — potentially saving tens of thousands.
- HSAs & Overtime/Tip Deductions: Strategies like HSA funding or new deductions for overtime and tips can yield immediate savings.
How We Quantify Your Tax Savings
For each strategy we recommend, our deliverable includes:
- Specific action steps — e.g., set up Solo 401(k), time the sale of a property, start a trust.
- A forecasted tax impact — dollar savings expected this year.
- A multi-year view — understanding how one decision affects future tax liabilities, cash flows, or estate value.
We believe tax planning should be measurable, not just theoretical.
Why Most Tax Preparers Fall Short
If your current tax pro only meets you in February or March to file returns, you’re getting backward-looking service. That approach misses time-sensitive strategies, potentially costing you thousands.
By contrast, our approach:
- Assesses your financials mid-year and year-long,
- Regularly adjusts for legislative changes,
- Ensures you execute before year-end deadlines, and
- Enables informed decisions in real time.
The Bottom Line
Tax planning isn’t just for the ultra-rich. It’s a powerful tool for anyone looking to:
- Minimize tax,
- Optimize cash flow,
- Make informed investment and business decisions,
- And protect wealth for the long term.
If you’re tired of being surprised by your tax outcome and want to see a plan with clear dollar savings, let’s talk. We’ll show you exactly what you qualify for and what you can save, before the year ends.
→ Ready for a tax plan that pays for itself? Schedule a call today.