In compliance with the tax codes and process laid by the government, it is mandatory for every citizen of the country to file their tax returns in the first quarter or by April 15th every year. In this context, taxpayers should typically be aware of two elements – tax preparation & planning. Both are equally important. One addresses your tax liabilities for the previous year, and the other takes care of the future.  What is tax preparation? Tax preparation is primarily concerned with computing and accounting for the previous year’s taxes. It calculates the amount you owe to the IRS (Internal Revenue Service) as per the tax code. You may need to hire the services of a competent and licensed tax preparer to help you with this process. The tax preparer will use all the given strategies to ensure that your tax amount is minimized. However, the minimization of tax liabilities at this juncture is quite limited. What is tax planning? This entails making plans to minimize your tax liabilities in the coming year. You can arrange your personal finances so that you can reduce the liabilities to the minimum. Consider tax planning to be a long-term process. With the right mindset and a seasoned planner, you can set your goals and make strategies to gain maximum benefits in the future.