What Is the Difference between Tax Planning and Tax Management?

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  • Written By: Kristie Lorette
  • Edited By: O. Wallace
  • Last Modified Date: 10 September 2019
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While tax planning and tax management correlate with each other, the two aspects of taxes have several differences. The primary difference between planning and management is the time frame in which each part is conducted. The tax planning takes place ahead of time, while the tax management is the implementation of the plan.

The first primary difference between tax planning and tax management is the requirements. While tax planning is not a requirement for either a business or individual, tax management is a requirement. Every individual and business in the United States is required to manage taxes, which includes filing the appropriate state and federal tax returns.

The second primary difference between planning and management is about tax liability. When a business or individual goes through the tax planning process, they are trying to minimize the tax liability of the entity by planning deductions, purchases and expenses ahead of time. Tax management, however, involves making sure that when the tax plan is implemented, that it is according to the tax laws and regulations.

The third difference between tax planning and tax management pertains to liabilities. Tax planning involves taking the actions necessary to minimize the tax liabilities of the business or the individuals. Tax management on the other hand is about avoiding the payment of interest or fees for not abiding by the tax laws and regulations.


The fourth difference is the time frame. Tax planning is an action that is taken in the present but relates to the future. Tax management, on the other hand, encompasses the past, present and future. this includes tracking past sales, deductions, assets and more, making current tax payments and preparing tax documents for any future payments that must be made.

While there are plenty of differences between tax planning and tax management, there is also one primary similarity. The primary similarity between tax planning and tax management is that tax planning is a subset, or a part, of tax management. When an individual or business is in the process of tax planning, they are also taking into account all of the aspects of tax management, including tax deductions, proper auditing of the accounting files and records, putting together and filing the tax return documents on time and planning for tax scenarios that may come up during that particular tax year.


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