Income tax planning includes any strategy used to defer, reduce, or shift either current or future income tax liabilities.  Most CPAs are accustomed to providing this service to clients on an annual basis.  Information gathered in the tax planning process generally forms the foundation for other Personal Financial Planning services.  

For many families income taxes represent one of the largest single expenditures each year.  Tax law changes that necessitate revised income tax planning for clients may also require updates in planning for investments, education funding, and retirement funding.  Deferring payment of annual income taxes (estimated taxes) can provide additional temporary investment funds.  

Tax reduction can be achieved in various ways, such as converting assets that generate taxable income to assets that generate nontaxable income.  Irrevocable transfers of income-producing property, either directly or in trust to charities or family members can shift the income and tax liabilities to the donee or beneficiary.  Seeking income subject to lower capital gains rates or deferring income to later years can also save taxes.  Using special carve-outs such as the principal residence exclusion, tax deferred exchanges or tax credits may be beneficial.