Tax management refers to the process of managing finances for the purpose of paying taxes. It involves filing tax returns on time, getting accounts audited, deducting tax at source, and other similar activities. Tax management is important because taxes are a mandatory financial charge imposed by the government to fund various public expenditures. Tax management helps in avoiding payment of interest, penalty, and prosecution.

Tax management is not the same as tax planning, which is about making sure you take advantage of every legal deduction and credit to minimize your tax bill. Tax management, on the other hand, is about reducing the taxes you owe each year by keeping your taxable income as low as possible. Tax management involves being careful about realizing gains and strategic about realizing losses. There are four primary techniques for tax management: holding securities long enough to qualify for a lower tax rate, selecting loss-maximizing or gain-minimizing tax lots for trades, moving securities in or out of a portfolio in kind instead of liquidating, and avoiding purchases that would disallow losses according to IRS wash-sale rules.

Tax management is important because taxes can reduce returns significantly, and every investor stands to lose money due to inefficient tax management. Tax management can help investors keep more of what they have earned. Tax management services are available from financial institutions like Morgan Stanley and SEI. These services use an array of tax-efficient features to potentially improve after-tax portfolio.

In summary, tax management is the process of managing finances for the purpose of paying taxes. It involves filing tax returns on time, getting accounts audited, deducting tax at source, and other similar activities. Tax management is important because taxes are a mandatory financial charge imposed by the government to fund various public expenditures. Tax management helps in avoiding payment of interest, penalty, and prosecution. Tax management is not the same as tax planning, which is about minimizing your tax bill. Tax management involves being careful about realizing gains and strategic about realizing losses. Tax management services are available from financial institutions to help investors keep more of what they have earned.