Most families think about taxes only when they, or a professional tax preparer, sit down to complete their federal, and maybe state, income tax return for the previous year. That's "after the fact" tax preparation. By then, it's too late to take certain tax deductions and credits based on strategies that needed to have been implemented during the tax year.

Unlike tax preparation, tax planning is a year-round process. Most tax-saving strategies must be carried out no later than December 31 of that tax year, and often well before that. Especially critical these days is planning for the dreaded alternative minimum tax, which is hitting even middle-income taxpayers.

Good year-round tax planning also requires good year-round record keeping. You need to be able to substantiate your claims or else you lose out on valuable tax deductions.