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H.C. Sharp Software — 1040 Review

802-785-2993 www.HCSharp.com

From the April/May 2008 Review
of Tax Compliance Suites

When the major tax preparation packages of today started gaining momentum
in the 1980s, most of them all lacked a solid analysis system. So, Henry Sharp,
an MIT-educated engineer and Enrolled Agent, set out to create what would become
1040 Review, providing tax professionals with an automated system to review
client data. The program has since grown into a full-featured diagnostics program
that not only helps identify potential IRS flags that can result in audits,
but it also provides client-ready reporting and review process checklists. At
$249, the program is an affordable addition to any practice that wants the peace
of mind that comes with third-party checking and validation of client returns.

The program takes just a few minutes to download and install, and it is very
straightforward in use. It offers a master screen that simplifies opening or
creating clients and a client return form/worksheet menu, allowing users to
quickly move to specific data. Users can enter data manually or import client
information from most major tax systems, with the program allowing overrides
or scenario testing to identify potential tax saving options or to find scenarios
with less audit risk.

The core components of 1040 Review are the analytical and reporting functions
in its benchmark-based diagnostic system, which compares a client’s return
with the data of taxpayers in similar income and tax situations. It then benchmarks
AGI, rental income, average deductions based on business code, gross income,
and specific itemized deductions. It then provides the professional with a client-deliverable
analysis report. This report, generated in Microsoft Word, provides narrative
and graphical components to show clients how their deductions and credits stack
up against other taxpayers as well as revealing areas for potential tax savings
and other recommended actions. It can also let them know whether certain aspects
of their return may trigger a review or audit by the IRS.

The system supports Schedules A, C, D and E. 1040 Review also has an IRA determination
feature that can help find the optimum deduction amount for each type of IRA
or combination of IRAs, including those for each spouse on joint returns. But
while analysis is the core function of the program, most popular among professionals
is the customizable Due Diligence Checklist, which gives tax professionals an
automated system to ensure that internal review processes are maintained, and
letting them ditch their old spreadsheet or paper-based checklists. The Due
Diligence Checklist can be tailored to meet a firm’s preferences and individual
reviewer/preparer roles.

While many of the major tax preparation systems have finally realized the value
of having an analysis and diagnostics system, they still often lack the fully
comprehensive capabilities of 1040 Review, not to mention the valuable Due Diligence
Checklist. Even for firms using a tax package with diagnostics, 1040 Review
is a must-have compliance enhancer since it provides deeper analysis and offers
greater insight into a client’s return, particularly for those with more
complex tax situations. The program’s client-ready reports also give added
value, helping to communicate to clients what they can do to minimize their
liability and audit risk.