Logical analysis of a financial situation or plan from a tax perspective, to align financial goals with tax efficient strategies. The purpose of tax reductons strategies is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax reduction stratgies thus allows the other elements of a financial plan to interact more effectively by minimizing tax liability.
Tax reduction strategies encompasses many different aspects, including the timing of both income and purchases and other expenditures, selection of investments and types of retirement plans, as well as filing status and common deductions. However, while tax reduction strategies is an important element in any financial plan, it is important to not let the "tax" tail wag the financial "dog." This can ultimately be counterproductive, as virtually all courses of financial action will have some tax consequences, and they should not be avoided solely on this basis.