Tax accounting refers to the process of preparing and reporting financial information for tax purposes. It involves calculating taxable income, applying relevant tax laws and regulations, and determining the amount of tax liability owed to the tax authorities. Tax accounting focuses specifically on the financial transactions and events that have tax implications, ensuring compliance with tax laws while optimizing tax benefits and minimizing tax liabilities. It involves the preparation of tax returns, maintenance of tax records, and adherence to specific tax accounting principles and guidelines.