Differences Between a Tax Preparer and a Tax Planner: Which One Should You Choose?

Differences Between a Tax Preparer and a Tax Planner: Which One Should You Choose?

People often think of tax preparation when they think about doing their taxes. As tax time approaches, people scramble to find savings and frantically rush to file their returns and avoid incurring penalties. However, a tax strategy is not just for filing your taxes every year. It can be an effective means of planning for the future and minimizing your taxes simultaneously. This is exactly where you need tax planning. 

So, then are tax planners different from tax preparers? In a nutshell, yes. The process of tax preparation is reactive, whereas tax planning focuses on the future.

While these words sound similar, each refers to a different aspect of taxation and has distinct meanings. As we go through each service, let’s see how they differ and choose the best one. 

What is Tax Preparation?


Preparing taxes is typically a one-time task. Normally, tax preparation takes place between January and April. A tax preparer or Certified Public Accountant (CPA) prepares tax returns before the deadline for filing. Tax preparation needs several documents that provide valuable information regarding income, investments, and retirement plan statements. The approach also considers multiple income streams, deductions, and charities. 

The role of a tax preparer 

A tax professional prepares the tax return by organizing and entering the previous year’s tax information. So you need to visit a tax preparer once or maybe twice a year. Their expertise in tax laws ensures that returns comply with the IRS regulations. So you can rest assured about meeting the federal and state regulations.

Tax preparers can offer general tax advice and tax-saving suggestions based on your previous records. A tax preparer can address general questions regarding the filing process. There will, however, be no proactive tax strategies to help you reduce your tax liabilities. The reason – Such meticulousness, detail, and planning fall into a more comprehensive process requiring more expertise and attention. 

Qualifications to look for in a Tax Preparer 

Preparer tax identification numbers (PTINs) are the primary requirement for preparing taxes. A PTIN needs no additional credentials or accounting experience. Some states require tax preparation certification, similar to a PTIN but do not signify expertise or competence. Tax preparation services can be provided for a fee by qualified tax preparers.

While anyone with a PTIN and the required state credential can prepare your tax return, it’s a prerequisite to be either a Certified Public Accountant (CPA), enrolled agent, or an attorney who can address things like IRS issues, payments, audits, and collection activities. 

Benefits of tax preparation

  1. Save more money. A tax professional understands tax laws and compliance. They maximize your tax deductions and credits.
  2. Save time. It takes a great deal of time and effort to prepare your tax return independently. A tax preparer can save all that time.
  3. Error-free returns. A mistaken tax return can have disastrous results. Errors can lead to audits and penalties. Additionally, you can reduce your risk for audit with tax preparation.

What is Tax Planning?


A comprehensive tax strategy will help you chart a course of financial behavior that will help you manage your taxes in the future. When it comes to tax planning, it’s less about your specific return and more about how to maximize it.

The role of a tax planning agency or tax planner 

Financial planning often entails a regular meeting with a financial planner and taking an active role in making decisions about your finances. Tax planning, on the other hand, is an ongoing process, one that shifts and changes as your goals do. A tax planner or tax planning agency integrates the changing financial dynamics and fosters an open and transparent relationship with its client. A tax planner will analyze your financial objectives, values, and future vision to create a personalized financial plan.

Creating a tax plan that meets your needs and considers your goals is essential. Few tax planning services like AOTAX have specific plans for businesses and individuals. They chalk out a plan considering both business and individual tax needs. The services vary from advisory services to business tax preparation and planning. All that so you can act fiscally responsible and tax-friendly.  

Qualifications to look for in a Tax Planner

While tax planners require a great deal of expertise and specific knowledge, they are not subject to any federal or state regulations. They need to hold a CPA for general tax planning or be an accredited tax advisor for sophisticated cases. The biggest asset for a tax planner is their industry knowledge regarding applicable laws and particular situations

Benefits of tax planning

  1. Reducing tax liability. An individual tax planner or tax planning agency focuses primarily on lowering liabilities or routing investments. When you have business income, planning throughout the year ensures you maximize tax credits, harvest losses from investments, and manage your wealth accordingly.
  2. Flexible estate planning. Don’t just leave your assets, but add a legacy to your heirs. You can lower your own and your heirs’ tax liabilities with tax planning.
  3. Know your investment returns. Your carefully thought-out investment plan can be ruined by expenses, capital gains, and even inflation, leaving you with considerably fewer returns than you anticipated.

Tax Planner vs. Tax Preparer

Tax preparation businesses cannot provide you with the expertise you need for tax planning. Planning your taxes and saving money are two ways tax planners can help you. A tax planning strategy must be implemented year-round to minimize your tax liability. 

Tax planners typically offer the following services:

  • Strategy for harvesting tax losses. 
  • Tax bracket management. 
  • Constantly plan other investment strategies which could get deserved returns while saving on taxes. 

Tax preparers typically provide the following services:

  • File tax returns.
  • Comply with state and federal tax laws.
  • Handle missed deadlines and resolution paperwork.

Finally, a tax planning agency is the best solution by weighing the differences. A tax planner will tailor the plan to meet your needs. They care about your individual or business financial goals and plan the future. Their meticulous planning strategies will help you reach those objectives while also fitting the taxation rules. Investing and taxes can sometimes seem out of reach. But not anymore with AOTAX. Get in touch today to get your free tax draft!

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Demystifying the ITIN Process: A Step-by-Step Guide to Applying for an Individual Taxpayer Identification Number

Individual Taxpayer Identification Number (ITIN) is a unique identification number issued by the Internal Revenue Service (IRS) to taxpayers who are not eligible for a Social Security Number. This number is used for tax purposes only and does not provide work authorization. The process of obtaining an ITIN can be a bit overwhelming, but AOTAX is here to guide you through the process.

Here is a stepwise process of ITIN application in the USA:

Step 1: Prepare the necessary tax documents

To start the ITIN application process, you will need to prepare the Individual Tax Return document (Form 1040) and any other relevant documents required to prepare your tax return.

Step 2: Obtain the W-7 application form

The W-7 is the application form for an ITIN. You can obtain this form from the IRS website or by contacting your tax professional.

Step 3: Fill out the W-7 form

Fill out the W-7 form with the necessary details, including your name, mailing address, birthdate, and citizenship status. You will also need to include your reason for needing an ITIN.

Step 4: Gather supporting documents

You will need to gather the necessary supporting documents, which include a copy of your passport, visa, or other official identification issued by the government. If you are applying for an ITIN for dependents, you will also need to provide documentation to prove their identity and relationship to you.

Step 5: Submit your application

Once you have completed the W-7 form and gathered the necessary supporting documents, you can submit your application to the IRS. You can do this by CAA process or in person visit at an Taxpayer Assistance Center.

Step 6: Wait for your ITIN to be processed

The processing time for ITIN applications is generally 10-16 weeks. During this time, the IRS will review your application and supporting documents to determine if you are eligible for an ITIN.

Step 7: Receive your ITIN

If your application is approved, the IRS will issue you an ITIN. You will receive a letter from the IRS with your assigned ITIN. This number will be used to file your future tax returns and other tax-related documents.

In summary, the process of obtaining an ITIN in the USA involves preparing the necessary tax documents, filling out the W-7 form, gathering supporting documents, submitting your application, waiting for your ITIN to be processed, and receiving your ITIN.

If you need assistance with obtaining an ITIN, AOTAX is here to help. Contact us today to get started.

Did You Know eFiling Protects Your Tax Returns?! Here’s How

Did You Know eFiling Protects Your Tax Returns?! Here’s How

The IRS began to accept tax returns on January 24 and has already sanctioned nearly 38 million refunds as of March. An average of almost $3401 has been refunded through March 4. 

If you are a resident of the US and are hustling with your tax returns, you have come to the right place. Although the process is challenging and some may find it complicated, eFiling for individuals is a more straightforward, faster, and safer means to file tax returns. 

Individuals can use eFiling for both federal and state taxes. The federal and state government has separate software that allows individuals to file their taxes electronically and send them to the government. 

Continue reading to learn more about eFiling, why should you consider it over in-person filing, its benefits and how we, at AOTAX can help you. 

Reasons to Use eFiling for Tax Returns this Season

Taxes can be filed in many ways: some fill out Form 1040 or Form 1040-SR by hand and mail it. However, many find it convenient to hire a tax preparer to file the returns, which may be expensive. 

The most straightforward way to file taxes is through eFiling using filing software. Here are some perks of eFiling for individuals:

Ease of use and flexibility

When filing taxes manually, one has to fill them out in person and mail it to the government or walk into the tax return office during 9-5 working hours to get it done. 

With eFiling, individuals can file tax returns at home at any time. This is more convenient and flexible for many who do not have the liberty to take time off to go to the office or send the forms over mail. 

Saving time and money

Efiling tax returns directly send your data to the server systems of the IRS immediately. This eliminates the need for sending mail to the IRS, which can take days. 

This also eliminates any transmission errors or unprecedented delays, or lags. As a result, eFiling is easier for both taxpayers and tax agencies as it is easier and faster.

Accurate filling

Efiling eliminates errors with record matching, transmission errors, or other manual errors from mailing tax return forms or filing them in person. 

This is essential to get maximum returns of taxes. 

With eFiling, individuals can upload all the necessary documents and the data and run mathematical accuracy tests to assess if figures are aligned. 

Using eFiling software can especially come in handy. The software can help assess typos, check mix-ups, and ensure that the IRS accepts the predicted refund amount and is processed on time. 

Reduced data manipulation

Many risks of filing tax returns manually come with data manipulation and window dressing. With eFiling, it becomes impossible to manipulate data. In addition, linking or tracing back the taxpayer also becomes more accessible with eFiling. 

One of the reasons e-filing is more safe, according to the IRS, is that your information is never in a hard copy version unless you print it off. Because there is no physical copy, there is less possibility that someone will look at your information when you are not present.

According to Mark Steber, the chief tax information officer at Jackson Hewitt, this also eliminates the risks of tax refund theft and identity theft caused by manual filing.

Authentic and accountable

Efiling has made taxpayers and tax agencies more accountable and authentic. However, the paper filing comes with high ambiguity, leaving taxpayers and tax agencies to treat tax returns with lethargy and negligence.

Efiling comes with frequent and periodic notifications that allow people to know if their tax returns are approved or denied, giving more certainty to the process. 

This helps individuals do what is necessary in case of a denied request.  

Quicker refunds


A tax expert and certified public accountant said that 9 out 0f 10 tax returns were issued by the IRS within 21 days when filed electronically. In addition, Mark Steber said that eFiling is the fastest and safest way for taxpayers to have their refund directly deposited into their bank account.  

With eFiling, most refunds are issued within 21 days either directly to the bank account mentioned in the forms or as a paper check which can take longer. 

However, filing tax returns in person can take weeks or even months to reflect in your bank account and can take up to two months to receive a paper check.

Tax experts recommend using eFiling for individuals to file taxes and consider filing them earlier to get faster returns. 

Efiling for Individuals with AOTAX 

AOTAX has helped many Indians in the USA file their tax returns using eFiling. AOTAX helps its users by filing individual taxes and getting tax drafts within 24 hours of filing. We also help Indian professionals working in the US with eFiling services with high accuracy and success rate. 

If this is the first time you’re filing tax returns or if you find it complicated to file them, we can help you create a tax draft, making it more straightforward, fast, and cost-effective to file your taxes. Reach out to us to easily file your taxes electronically with AOTAX.