What’s the Difference Between a CPA and a Tax Planner?

CPAs do the important number crunching for tax preparation and filing, but tax planners look at the big picture and come up with tax-saving strategies.

A businesswoman and a businessman look at paperwork at a table in a conference room.
(Image credit: Getty Images)

I was doing a workshop on tax planning in our community in Columbus, Ohio, when a self-assured CPA walked into the room. His confidence was overwhelming as he declared that not only did he already know everything I planned to discuss that evening, but he should be the one delivering the presentation.

I have a bit of a sense of humor, so I had to have some fun with him. During the workshop, I posed challenging questions about tax planning strategies we use with our clients, strategies that often remain unknown or misunderstood by many. I quizzed him on the ins and outs of Roth conversions, the tax implications of claiming Social Security at 62 vs 70 and the concept of a backdoor Roth IRA. As I expected, he did not have the answers.

Tax preparer vs tax planner

This man was a tax preparer, not a tax planner. There’s a difference between the two. Tax preparation is primarily about data entry and number crunching from January to April. On the other hand, tax planning is a year-round activity that involves proactive strategies to save as much money on taxes as possible. We specialize in the tax planning part.

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We were able to humble that tax preparer, and fortunately, he is now a client. We have been able to save him hundreds of thousands of dollars in taxes from the planning strategies that we helped him implement.

Now, I’m not here to talk bad about CPAs. CPAs are great. I recommend everyone work with a CPA to ensure that their tax filing gets done correctly. However, tax planning is not usually a service CPAs provide in depth. It’s a complex process requiring a significant time investment and an intimate understanding of a client’s situation and goals, which most CPAs don’t have the bandwidth to handle.

Tax planners take a deep dive into your taxes

For many of the clients we work with, it can take upwards of 20-plus hours to build a comprehensive tax plan. This involves a deep dive into their tax return from last year to see what we missed and what opportunities they have. Oftentimes, these strategies consist of Roth conversions, tax loss harvesting, tax-efficient income planning for income, Social Security claiming strategies with the impact of taxes and planning to make sure beneficiaries receive as much money as possible with the least tax burden.

All of these are items that most CPAs do not do and that involve a more sophisticated tax plan. They would also need to understand your situation and your goals fully. Most CPAs do not have detailed conversations with you to understand everything outside of the numbers.

To sum up, many retirees miss out on tax planning opportunities simply because they are unaware such possibilities exist. Because of this, I’ve made it my mission to guide as many retirees as possible toward integrating tax planning into their retirement planning strategies, which can significantly reduce one of the biggest expenses in retirement. I even wrote a book, titled I Hate Taxes that shares insights into minimizing tax liabilities through effective planning.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Joe F. Schmitz Jr., CFP®, ChFC®
Founder and CEO, Peak Retirement Planning

As Founder and CEO of Peak Retirement Planning, Inc., Joe Schmitz Jr. has built a comprehensive retirement planning company focused on helping clients grow and preserve their wealth. Under Joe’s leadership, a team of experienced financial advisers use tax-efficient strategies, investment management, income planning and proactive health care planning to help clients feel confident in their financial future — and the legacy they leave behind. Joe has also written a book, titled I HATE TAXES. You can find Joe on YouTube, where he creates educational videos for those in or near retirement. If you would like to talk to Joe’s team, you can schedule a meeting.