What must be maintained to ensure effective tax planning?

Maintaining accurate records is essential for effective tax planning because it provides a clear and comprehensive view of an individual or business's financial situation. Accurate records allow taxpayers to track income, expenses, and deductions accurately, which is crucial for preparing tax returns and making informed financial decisions. They help to ensure compliance with tax laws and regulations, reduce the risk of audits, and maximize potential tax benefits. Moreover, up-to-date and precise records support the ability to strategically plan for taxes in future years, allowing for better forecasting and the opportunity to make adjustments as needed to minimize tax liability.

In contrast, high-risk strategies, outdated methodologies, and opinion-based filing can lead to complications such as non-compliance with tax laws or inefficient use of resources. High-risk strategies may expose taxpayers to severe penalties or audits, while outdated methodologies could ignore recent changes in tax legislation. Opinion-based filing can introduce errors or biases that further complicate the tax situation. Therefore, the importance of maintaining accurate records as a foundation for effective tax planning cannot be overstated.