Can you explain the difference between tax planning and tax preparation? How do you approach each process, and how do they fit into the larger picture of tax compliance? Tax preparation is done after the year end, and tax planning is a proactive approach to tax. We look at a taxpayer’s prior filings and their current and future earnings and see what strategies we can implement to help minimize their tax exposure. What are some common tax planning strategies that individuals and businesses can use to minimize their tax liability? How do you determine which strategies are best for a given client? Each client’s situation is unique. You need to gather as much information from them and apply that to their own situation. Tax planning generally requires certain strategies, such as using tax-deferred investments, reviewing tax credits, and charitable contributions, to name a few. How do you ensure that your clients are in compliance with all tax laws and regulations, and what steps do you take to mitigate the risk of audits or other legal issues? I spend 30 to 40 hours a year on CPE to ensure I am up to date on all taxrelated matters. I take a hands-on approach with my clients to ensure they understand the tax filing process. I am never surprised by how little most people understand about their income tax filing. I believe everyone should understand how the process works. I try and educate and inform my clients. Tax laws and regulations are constantly evolving. How do you stay current with the latest changes, and how do you advise clients to adjust their tax planning strategies accordingly? As I mentioned, I undertake countless hours of CPE and read as much related content as possible. Also, I understand that I cannot know everything, so I am always willing to learn. Can you walk us through a recent case where you helped a client optimize their tax planning and maximize their return? What were the biggest challenges, and how did you ultimately achieve a successful outcome for the client? A client came to us in mid-2022 and asked for our assistance. We reviewed their 2021 return and what they had for 2022 to date. After reviewing, we suggested they max out their deferred compensation (401K, HAS, and Child Care), sell off some losing stocks, and adjust their withholdings. The biggest challenge is getting the client to understand that sometimes, you just have to pay taxes, and if they follow the plan, they will better manage their income. We must communicate with the client to ensure they execute our plan continuously to achieve success for the client. Joseph Lentini, EA is the Manager of Continental Tax Planners. He prepares and oversees the preparation of over 1,500 tax returns. The biggest challenge is getting the client to understand that sometimes, you just have to pay taxes, and if they follow the plan, they will better manage their income. Finance Monthly. Banking & Financial Services 49
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