Tax Planning Software Reviews

By Oppenheim, Richard | The National Public Accountant, November 2004 | Go to article overview

Tax Planning Software Reviews


Oppenheim, Richard, The National Public Accountant


Tax planning is a significant part of an accounting practice regardless of rate changes, number of deductions or amount of regulation. The key difference, as we all know, is that tax planning requires looking ahead to the rest of this year, along with a few years into the future. Instead, tax preparation software looks backwards. Our focus here is on the proactive use of tax planning software to provide value-added services to your client base.

High-net-worth individuals know about the value received from specific transaction-based tax planning. Lots of other clients can also benefit from careful assessments of this year's tax burdens and comparing it with slightly changed tax burdens for next year. It is not just the extremely wealthy who need to understand the value derived from tax planning.

There is little debate about the value of computers and software to prepare the wide range of returns that must be filed each year. When I created a tax projection program 30 years ago, no software existed that was easily installed and used. The benefits back then were based on a few key complexities surrounding capital gains and prepaying state taxes. Today, the complexities are substantially greater.

The focus on tax return preparation within the computer world enabled the creation of several very good programs for individual consumers' use without the aid of the accounting professional. A key reason that this can be accomplished is that the information on a tax return is historical. The facts do not change.

For tax planning, assumptions can change on a daily basis for a wide variety of reasons. The potential tax consequences for specific transactions must be considered. Is income taken in this year or next? Are deduction postponed or accelerated? These questions need the professional knowledge, training and experience of a practicing accountant.

Tax planning packages provide answers grouped as sets of choices, rather than as specific final tax payments due. It is important to remember is that this information is dynamic and fluid. You can start in month one with basic numbers for the year and continue to update these numbers as the year progresses. This form of proactive analysis links the practitioner with their client for ongoing assessment and value-added service.

These reviews focus on the nature of processing and the amount of effort required of the accountant. The programs reviewed are not consumer shelf products; they are deigned for tax professionals with many clients who need competent and valuable tax planning services.

Further, while the data can be entered by the tax-challenged, its impact must be determined by a professional. These programs have all the computation power to determine amounts allowed or limitations based on the tax regulations. Further, the programs also identify missing information needed to complete particular transactions.

Which program is right for you is always a great question, and, in this category, there is no easy answer. The selection must be based on what you use for your other tax-related applications. There typically is little benefit for acquiring two very different programs that require double learning.

One consideration in how often software is used is its ability to integrate into billing. Each reviewed program permitted the entry of client data with coding to identify and assist in billing. Master data, such as name, spouse and address, were accessible at this point.

Bottom Line: If you provide personal or business-related services, tax planning services are essential. Even if you do not provide tax preparation services, tax planning is a valuable process for every client's financial assessment. These programs can support your efforts to deliver substantial business and personal advice.

Multi-Column Presentation Shows Plans Side-by-Side

The BNA Income Tax Planner's user interface is a drill-down spreadsheet that allows the entry of as much or as little detail as desired. …

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