Tax Planning and Tax Preparation Are Two Different Engagements. One Looks Back a Year. The Other Looks Forward Decades.

Tax preparation and tax planning are two different jobs. Many households have hired only the first. Preparation reports a year that has already ended. It records what happened, with care and real value, and a household with a good preparer should keep that person. Planning looks at the years to come, while the decisions that can help shape future taxes are still open. The accounting profession draws the same line. The American Institute of Certified Public Accountants publishes separate standards for compliance work and for consulting work, and treats them as different engagements. Many households signed up for a return. They may never have signed up for a projection. What often goes unmeasured is a single number that projects the federal income tax owed across the decades ahead, carried through the year one spouse begins filing alone and the ten-year window that follows for heirs and beneficiaries. For high earners with large pre-tax balances it can be one of the larger expenses of retirement. This article explains why the second job often goes undone, what its absence can cost, and how to recognize the person who does it. Written by Todd Talbot, CFP®, Certified Tax Specialist™, a tax-focused independent retirement planner in Birmingham, Alabama.

You have a tax return.

You may not have a tax projection.

Many people never learn these are two different jobs.

Many go looking for the second one and cannot find who does it.

A Return Is a Record. A Record Cannot Change What It Records.

What is the difference between tax planning and tax preparation?

Tax preparation is the accurate reporting of a year that has already ended. Tax planning is the projection of tax across the years still ahead, while the decisions that help shape it are still available. Both matter. A good preparer does a hard technical job under real time pressure and gets it right, and the standard of care is high.

Here is one way to see the difference. In medicine, a pathologist reviews the past and documents what happened. A pathologist does not write a prescription to change the future; that was never the job. A tax return, and the excellent CPA who prepares it, work the same way. They establish, with precision, what already happened.

Changing what happens next is a different job. Your physician runs tests and writes prescriptions meant to alter the trajectory ahead. That second visit is tax planning.

A tax return is a receipt. It tells you the price after you have already incurred it.

That is the whole reach of the document. One year, backward. Retirement does not run on that horizon, and neither does a life. A couple in their early sixties, sitting on seven figures in traditional 401(k)s or IRAs, could be deciding each year whether to convert a slice of it to a Roth before required withdrawals begin. That choice can change what they owe starting at seventy-five. It can move it again the year one spouse files alone. It can move it a third time when the account passes to the beneficiary. The decision and its result can sit twenty years apart.

No receipt reaches that far.

Nobody Dropped the Ball. The Step Exists. It Often Has No Owner.

Does my CPA do tax planning, or just my return?

It depends on the engagement, and the honest answer is often narrower than clients expect. Under the profession’s own Statements on Standards for Tax Services, a practitioner generally has no duty to revisit how later events affect earlier advice unless the client hired the practitioner to do exactly that. Many households never signed that engagement. Nothing was withheld. The second job simply was never included.

So the step is real. It is a definable piece of work. In my experience, people rarely think to ask for it, and preparers rarely offer it. The result is that many households end up with a return, not a projection.

Your CPA is probably not failing you. Your CPA may never have been hired to do this.

The most common version I see is not a household with bad advice. It is a household with an accurate return, a good CPA, and no third document. Asked whether they ever requested a multi-year projection, many say some form of the same thing: they did not know it was a thing they could ask for. They might assume that if it mattered, someone would have run it. That assumption is reasonable. It may also be one of the more expensive ones a household carries into retirement.

In Your Seventies, an IRS Formula Can Raise Your Minimum Withdrawal.

What happens to a pre-tax account left alone in retirement?

A pre-tax account left alone does not stay quiet. Required minimum distributions begin at 73, or at 75 for those born in 1960 or later, and the government sets the amount. The divisor that sets it shrinks each year, so the forced withdrawal grows as a share of the account. Potential taxation of Social Security layers on top. So can IRMAA, the Income-Related Monthly Adjustment Amount, a surcharge on Medicare premiums. IRMAA runs on a two-year lookback, so income this year can raise a Medicare bill two years later, and it works as a cliff rather than a slope: one dollar over a threshold can trigger the full tier for twelve months. So can the year a surviving spouse begins filing single on close to the same income.

None of this shows up on an account balance. All of it can add into one number that no document a household typically receives is built to assemble.

For many retirees the number stays small, because Social Security is the main income and little of it is taxed. The pressure concentrates at the top, and it tends to grow with the size of the pre-tax balance rather than the size of the paycheck. A household that saved diligently in pre-tax accounts has not avoided the tax. It has deferred it. Dollars in a traditional 401(k) or IRA generally carry an unpaid bill, already written and not yet sent. The larger the balance, the higher the brackets that bill may be paid in, and the less control the household may have over the timing once required distributions begin. For a hypothetical couple with two to three million dollars in pre-tax accounts, federal income tax across retirement can be one of the larger expenses of retirement. It often falls hardest on households that have done what the standard advice asks.

The percentages often understate how it lands, because the dollars are what people feel. Many retirees can name the expenses they plan for: housing, health care, transportation. For many high earners with a large pre-tax balance, the federal income tax across retirement belongs on that list. It can be larger than the mortgage, larger than the tuition checks, and perhaps larger than any single check the household will write. It does not arrive that way. It arrives in pieces, one year at a time, across the decades the account is drawn down.

The projection is the thing that measures all of this, and it has a deadline. At seventy-five the withdrawal is no longer a choice, so much of what a projection could have helped change is already fixed. The measurement is worth more while the decisions are still open.

The Same Dollars Can Be Taxed at Three Different Rates.

What is the SECURE Act ten-year rule for inherited IRAs?

Under the SECURE Act, most adult children who inherit a pre-tax retirement account must empty it within ten years of the owner’s death. If the owner had already begun required distributions, the heirs must also take withdrawals in years one through nine. The old stretch, which let a beneficiary spread distributions across a lifetime, is gone for most non-spouse heirs.

That rule is where a household’s pre-tax balance can be taxed at three different rates. The couple deferred those dollars at their working-years rate. The surviving spouse then draws them at single-filer rates, usually in the tighter brackets that follow the first death. Whatever remains lands on the children who may be in their own peak earning years, stacked on top of their salaries, inside a ten-year window they do not control. The deferral was never free. It was rented, and the last payment can come due in the next generation.

The window in which any of this can change stays open only while the account is still pre-tax and the dollars can still be pulled out at a bracket you choose. For a married couple, that window is typically widest while both spouses are alive. A conversion done in the joint-filing years fills brackets at rates the survivor and the high-earning heirs may never see again. Once one spouse is gone, many of the levers are gone too.

The Reader Is Not Poorly Advised. The Projection Just Has No Owner.

Why doesn’t my tax preparer run a multi-year projection?

Usually because the engagement was never priced for it and the calendar has no room. Preparation work concentrates into about three and a half months, during which one preparer may handle several hundred returns. A multi-year projection is custom analysis that produces no filing and meets no deadline. As one certified public accountant, Sarah Harris, has put it, a few-hundred-dollar return does not come with much tax-savings advice, if any (Agate CPA, 2024).⁵

Many households have never framed the question at all. In a 2026 national survey, about 65 percent of retirees said they had not considered how tax rates would affect their retirement income while they were planning for it (Nationwide Retirement Institute, 2026).²

And many would move to get it. Roughly three in five would change financial professionals for one who could help them plan for taxes in retirement, a figure the 2026 Nationwide survey puts at 62 percent, with a comparable Allianz finding the same year (Nationwide Retirement Institute, 2026; Allianz Life, 2026)^2,3,4. That number has been climbing: an earlier Nationwide survey put it at 38 percent among near-retirees in 2018. The underlying worry is widespread, with about 70 percent saying they are concerned about taxes on their retirement income (Allianz Life, 2026). Wanting the second job done, and being willing to change advisors to get it, is a common and reasonable position. It is not disloyalty to a good preparer. It is a different job.

The Question That Helps Address Which Job You Bought.

How do I find a retirement tax planner, and what should I ask?

Ask what horizon the projection covers, in years, rather than whether a firm does tax planning. A useful projection runs to the end of the plan, not the end of the year. Ask whether the model includes IRMAA and the year a surviving spouse begins filing as a single taxpayer, because those two may carry large consequences and are the ones often left out. Ask whether it carries through to heirs and the ten-year window they face. And ask whether anyone independent reviews the result before it reaches you.

There is a simpler version of the same question, and it is not a challenge to anyone’s competence. Ask your preparer what your tax bill looks like at seventy-five. If the answer is that the engagement covers the return, that is a complete and legitimate answer. It just is not a projection.

Ask your preparer what your tax bill looks like at seventy-five.

You Cannot Manage a Number You Have Never Seen.

Why does the missing projection matter?

Many people want to know what they owe. The more useful question may be what they are going to owe. A tax return is a record of one year, made by someone hired to produce a record. A retirement tax projection is a model of the years ahead, built by someone hired to build a model. Almost every household has bought the first. Fewer have ever been offered the second.

The measurement is where the second job starts, and it comes before any advice. The Retirement Tax Diagnostic™ is a no-cost projection of the federal income tax built into the years ahead, carried through the surviving spouse’s years and the ten-year window that follows for heirs. It does not, by itself, change anything. It produces the one number that every later decision can be measured against, and a household that has seen that number once tends to stand in a different place than one that never has, whatever it decides to do next. Judge Learned Hand observed, ninety years ago, that no one owes a patriotic duty to arrange their affairs so as to pay the most tax the law allows (Helvering v. Gregory, 1934). Many retirement plans still behave as though someone does, not out of conviction, but because nobody was assigned the job of checking.