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Review of Tax Planning Software — 2005

Tax practice is many things. In our tax practice, the ability to effectively “tax plan” has been the key to the retention and recruitment of clients, and I believe our office is typical.

From the November 2005 Issue

Tax practice is many things.

In our tax practice, the ability to effectively “tax plan” has
been the key to the retention and recruitment of clients, and I believe our
is typical. We offer standard tax services such as the preparation of federal,
state, local and other tax returns and forms. We represent our clients before
taxing authorities. We advise our clients on tax-specific subjects, field tax-related
questions and assist our clients with “event-type” tax planning
(purchase or sale of business, retirement – “what if”). And,
very importantly for our tax practice, we provide “annual tax planning”

Okay, so you may ask, “Just what is ‘annual tax planning?’”
I like to think of annual tax planning as planning before “it’s
too late” — it’s current-year tax planning when action(s)
can affect the amount of Federal and State income taxes. What is the output
of this service? Our output is a Tax Projection Report for a given year, usually
focusing on the prior tax period and the current year, a comparison that will
make sense to many clients.

When some practitioners hear this they ask, “Where’s the Beef?”
The “Beef” or payback to the client-taxpayer runs the full gamut.
This includes maximizing tax savings by taking advantage of timing of income
and deductions, saving penalties on underpayments of estimated taxes by freeing
up dollars that would have been otherwise tied up in estimated taxes, dealing
with low-income years as avoiding “excess” deductions that bear
no fruit in tax savings, or simply allowing the client-taxpayer to experience
control over knowing their ultimate “tax destiny,” whether they
owe taxes, can expect a refund or can expect neither — “breaking
even” — come Tax Day, April 15. Yes, that’s it; no surprises.

We have found that there is a strong likelihood that the tax client who plans
with us will return with tax information in hand at tax preparation time. While
some may argue this statement is anecdotal, not being based on a large empirical
sample, we can point to billings and happy clients every year.

Of course, we recognize that not every client is suited to or feels they need
to avail themselves of our tax planning services. However, we have found that
affordability is a key. To that end, we can offer our annual tax planning services
on a simple basis. For clients who are wage earners, we can create a tax projection
very quickly utilizing current year income (often this is year-to-date pay stub
information) and estimated deductions based on prior tax returns. For those
clients who require more complex and transaction-specific reporting, we can
get as detailed as they require. Typically, these are our “business owner”
clients. Whatever the need, we can tailor the service to a given client’s
situation and needs.

All of the tax planning programs reviewed here possess the ability to populate
program-created tax projections, to roll client-specific information from year-to-year,
and to allow modification of that data. You’ll learn more about that as
you read each review, but the power of computing is working here and it’s
a case of much less “brawn” than there was some years ago. In most
situations, it’s fairly easy for us to render tax planning services, such
that few clients should miss out. And come tax preparation time, we know exactly
what to expect from clients for whom we prepared tax projections.

It’s truly a case of using our brains instead of our brawn. That is,
we are able to harness the program’s “what if” and tax computational
abilities in our tax planning program as we harvest our tax projection database
information that was created, in part, by the sharing of information with our
1040 tax program.

And for the tax planning client, it’s an opportunity to be informed
about the “what ifs” that are available to them for their current
tax year, to review changes in tax law that affect the client’s current
and future planning, to better cash plan for the eventual income taxes the client
will pay, to avoid penalty taxes like the AMT, to avoid penalties for underpayment
of taxes, and to develop a feel for projected income taxes in coming years.
My firm considers our tax planning program to be a true “Swiss Army knife”
in advising and assisting our individual tax clients. Every practitioner should
have one.

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BNA Software — BNA Income Tax
King of the Realm: That is what the BNA
Income Tax Planner with (optional) 50 States is often called. The BNA
Income Tax Planner is truly an industrial-strength income tax planning
CCH Tax & Accounting — ProSystem
fx Planning
CCH’s ProSystem fx Planning is a
comprehensive tax planning program that computes federal taxes and supports
the following states…
Lacerte — Lacerte Tax Planner
The Lacerte Tax Planner provides comprehensive
federal and state income tax planning that features multiple-scenario
and multi-year planning…
PPC — Individual & Business
Tax Planning Libraries
This product was not reviewed, but an overview
is provided for informative purposes.
Tax Planning is a mainstay
of tax practice today.

TaxWorks — TaxWorks TaxPlanner
The TaxWorks TaxPlanner is an add-on to the company’s
tax preparation software that can also be used stand-alone. TaxWorks conceived
TaxPlanner as an easy-to-use “what if” tool for accountants,
attorneys and tax practitioners. TaxPlanner supports up to five concurrent
tax scenarios or years. It incorporates the new tax law and upcoming phase-in changes and displays powerful tax calculation abilities.
Thomson Creative Solutions —
Planner CS
Planner CS supports tax planning via comprehensive
calculations for federal and all states with a tax (44 plus the District
of Columbia). Planner CS also supports non-resident income tax calculations
for CA, CT, IL, IN, MA, MD, MI, MO, NC, NJ, NY, OH, PA, SC and WI. It produces income tax projections for (up to) 50 Cases and 100 years of data. Planner CS Federal costs $500
TaxCoach — TaxCoach
This product was not reviewed, but an overview
is provided for informative purposes.
A recent addition to the tax
planning market is a product from TaxCoach Software, which produces a
self-named online program that professionals can use to develop personalized
tax plans for their clients.

Tax Planning Software 2005 — Executive
We live in a time of constant tax change, characterized
by multiple tax acts being legislated in a single year. Recent tax legislation
includes the American Jobs Creation Act of 2004, Working Families Tax Relief
Act of 2004, Jobs and Growth Tax Relief Reconciliation Act of 2003, Job
Creation and Worker Assistance Act of 2002, and the Economic Growth and
Tax Relief Act of 2001.