Alright, and a very important topic today,
and talking about the differences between tax planning and tax preparation.
Huge differences. There's a massive difference in the results you can get when you're
filing your taxes. Your tax return at the end of the year. So here's,
here's the differences. And it probably sounds very basic and simple,
but it's very important points I want to make here.
when you're tax planning, you're being proactive,
and you are planning before the end of the year,
typically, and when you are doing tax preparation,
that's after the fact. That's after the year has ended.
That's when you are filing the tax return. So on one hand,
when you are filing. You're doing the tax preparation.
It's, it's a history report. You're reporting what's already happened.
That's the reactive side. That's, we're,
we're showing what's happened, we're making sure things are documented correctly.
We, we're there might be some deductions you could scrap together there at the
end, but that's reporting the past. Tax plan.
That's planning, that's proactive,
and that's planning for the future. That's looking ahead.
Those are, you'll, you'll the key words like doing a projection,
you're projecting out the future, future.
You are, we are making estimates. Typically,
but there's estimates, there's future planning,
and this, in that planning stage,
that's where you can do and really get into the strategies.
That's when you can really start to think strategically.
You can think through your options. And you've got time where you want to
make sure you've got some time to think through those things.
Tax. You. You can have, there are some positive impacts,
and good things, and positive things you can do through good professionalism.
Professional tax preparation, but with the tax strategy and the planning,
there's so much more you can do. If,
if you do it before the end of the year. So I'd say, first
things first, plan for the tax.
Before the year ends.
That's, that's one of the most important things because there's so many doors that
close. So,
as a quick example, like if you're, if you're a real estate investor,
say you've got, real estate professional status,
or you want to offset some of your income with a short-term rental through
a cost area. If you close on that home,
like the tax differences, tax difference between closing on that home January
1st of next year compared to December 31st this year,
it is a complete cutoff. And the tax,
the tax laws can change, but one,
the tax treatment on your specific tax return that we file next year.
Will completely change. One,
it's, if it's, if you close on it next year,
it's not even going to show up anywhere. It's not even going to be
on the radar. If you close on it this year,
it opens up all sorts of opportunities. So that's just with rental properties.
But there's the same thing with, types of things with retirement contributions and HSA
contributions. And sometimes some of these do carry over.
After the year, like those two I just mentioned,
retirement contributions, HSA contributions,
sometimes. Well, a lot of times,
as long as you do it before you file the tax return,
you actually can get and contribute into those,
into certain retirement accounts, and into HSA plans,
up until April 15th. The other things,
and honestly I could probably count them on one go. Maybe two hands of
things you can do after the year as far as,
like, late contributions or as long as you contribute by the time.
So think, so I mentioned an example for real estate investors.
So another example for business owners.
So say you're looking at buying equipment,
or you're paying employees, or you're looking at bonuses.
or say you sold your business. Like, all of these are,
like, if you sold your business, or you sold a lot of stocks,
or if you're doing, if you're a retired individual and you need to,
ah, do some, like, Loss Harvesting to offset some of the gains you had
early on in the year. You've got to do that stuff before the end
of the year. Even if you're trying to be proactive and wanting to start
your tax preparation process in, say, January.
I would jump back at two months. I would jump back two months. I
tell people, like, the absolute latest.
I would start looking at it in November, but even in November,
it's feel, it'll feel like a scramble. I would go back.
We're in July now, and I would go back into the summer.
That's a Meteor checkup,
looking forward at your withholding if you're a W2 employee,
looking at your year to date income if you're a business owner,
looking at all your other… your… your… your tax calculations.
So here's… here's the step-by-step process for planning the
very First thing you should do, well one,
make sure you're caught up for the prior years. Get caught up as much
as you can. Make sure. Like, bookkeeping,
accounting, make sure those are caught up because you need good data to make
good decisions. So make sure your data and your documentation is,
all up-to-date. And then when you're ready,
the next step, is we want to start looking at the future.
So we project. So we're projecting out into the future.
We're coming up with the one with an estimate.
We're kind of predicting the future of where you're at.
We usually go in two different scenarios.
Where you're at now, if you don't change anything,
compared to where you could be with some strategic planning,
or with some, adding some strategies,
or, or maybe it's some additional investments,
or for watching. Thanks for buying certain things, or selling certain things,
and just the timing of all of it. We've talked about the tax planning
framework. It's really great. Going through all those things.
But the projection, so make sure you're caught up from the past,
do the projection, and then from there you can start planning and strategizing for
looking at, yeah, looking at the future. So,
there's a lot of, we won't get into all the planning operations. There's a
I just really want to make that point across of planning and
strategy versus planning. Tax preparation.
Tax preparation. It's got to be done right.
It's got to be done accurately. But after that's reporting the history,
that's a more re- that's reactive. The proactive side is that.
It's the planning, it's the strategy, it's an ongoing,
say it's ongoing touch points with your tax advisor.
It's ongoing, it's quarterly meetings,
it's quarterly projections, it's staying on top of the stuff.
before the year ends. So,
those are the main differences. It's a very important topic,
but we will be releasing more in quite a bit more topics about now
that it's summer, 2026,
about being proactive, getting started. with planning,
we'll be releasing the tools, we'll be doing more of the videos and giving
you quite a few templates. And helping you out where we can,
so have a good rest of the day. See ya.
