Tax Planning is a proactive way to ensure that you have no surprises when you file your income tax returns by utilizing all oppurtunities to defer income and reduce taxes. Have you ever filed your tax returns and wondered why you owed so much money or why your refund is smaller than last year? Tax planning consists of estimating and projecting your income tax returns prior to the end of the year. There are several ways to reduce your income tax liability through tax planning. The average time needed to project an estimated income tax return is about two hours. Tax planning is essential not only for corporations, s-corporations and partnerships, but also highly recommended for individuals and sole-proprietorships.