What Is Tax Planning?
Tax planning is the proactive process of organizing your financial affairs to reduce tax liabilities while complying with federal and Massachusetts law. By anticipating changes—such as income spikes, investments, or business growth—you can make strategic decisions that preserve cash flow and improve long-term financial health.
Why Tax Planning Matters
- Lower Liabilities: Identify deductions and credits to reduce your overall tax bill.
- Cash Flow Management: Time income and expenses to keep more money in your pocket throughout the year.
- Regulatory Compliance: Avoid penalties, interest, and audits by staying up to date with IRS and Massachusetts DOR rules.
- Peace of Mind: Gain confidence in your financial decisions with a clear, documented strategy.
Tax Planning for Individuals
- Income Structuring: Balance wages, investments, and retirement distributions to optimize tax brackets.
- Deductions & Credits: Maximize common deductions (mortgage interest, medical expenses) and credits (child tax credit, education).
- Retirement Vehicles: Leverage IRAs, 401(k)s, and HSAs for tax-deferred or tax-free growth.
- Investment Planning: Strategize capital gains and losses, tax-efficient funds, and charitable giving.
- Life Events: Adjust for marriage, divorce, inheritance, and estate considerations with targeted advice.
Tax Planning for Businesses
- Entity Selection: Choose the right entity (LLC, S-Corp, C-Corp) for optimal tax treatment.
- Depreciation & Amortization: Accelerate or defer depreciation on equipment, real estate, and intangibles.
- Retirement & Benefit Plans: Implement SEP IRAs, SIMPLE IRAs, or 401(k) plans to reward employees and reduce taxable income.
- R&D & Credit Opportunities: Qualify for R&D credits, energy incentives, and other industry-specific breaks.
- Cash-Basis vs. Accrual: Select the accounting method that best aligns revenue recognition with expenses.
Our Tax Planning Process
- Initial Assessment (1–2 Weeks): Review financial statements, prior returns, and your goals.
- Strategy Development (2–4 Weeks): Craft a customized tax plan outlining recommended actions.
- Implementation Guidance: Assist with account setups, elections, and filing adjustments.
- Ongoing Monitoring: Quarterly check-ins to adjust for life changes, new legislation, or business shifts.
- Year-End Review: Finalize credits, deductions, and compliance checks before filing season.
Timeline & Typical Fees
| Stage | Timing | Fee Structure |
|---|---|---|
| Initial Assessment | 1–2 weeks | Flat fee |
| Strategy Development | 2–4 weeks | Flat or hourly |
| Implementation Support | 2–Ongoing | Hourly |
| Quarterly Reviews | Quarterly | Subscription or hourly |
| Year-End Review & Filing | Annually | Flat fee |
Fees vary by complexity. A clear engagement letter will outline all costs.
Frequently Asked Questions
Q: When should I start tax planning?
Ideally before the tax year begins or as soon as a major life or business change occurs.
Q: Can tax planning reduce my audit risk?
Yes—well-documented strategies and compliance reviews lower the chance of triggering an audit.
Q: What’s the difference between tax preparation and tax planning?
Preparation focuses on filing past returns; planning is forward-looking and strategy-driven.
Q: Do small businesses need formal plans?
Absolutely—early planning around entity choice and deductions can save thousands over time.
Q: How do I update my strategy mid-year?
Schedule a quarterly review to adjust for income changes, new investments, or legislation.
Q: Are virtual consultations available?
Yes—our attorneys offer secure video or phone meetings for Boston and remote clients.
Q: What documents are required?
Recent tax returns, financial statements, bank & investment records, and entity formation documents.