Comparison Guide: Tax preparation software
It’s never too early to start thinking about tax season. With tax preparation a prime source of revenue for many practices and spanning the better part of the year with extensions, corporate and other non-1040 returns, and different fiscal year closing times, tax season has pretty much turned into a year-around task for many practitioners.
While it’s still some time before you have to start setting up the practice for the upcoming tax season, it’s not too soon to start thinking about what software you will use next time around. Many practitioners will stay with the same software they used in the most recent tax season, or even for years before that. That’s a safe and comfortable way to go, and chances are, while your permanent staff might be a little rusty going into the season, they will quickly repolish their skills in using a familiar application.
But going with “the old familiar” isn’t always the best choice. Sometimes a change is a better choice, even though it might mean putting a bit of extra work,
time and money toward gearing up before the deluge.
While there are numerous reasons why you might want to change your software provider, the three most common are disappointment with your current vendor’s support, the inability of the current software to do calculations necessary for some of your clients, and a change in the client makeup of your practice. Any of these alone is a sign that it may be time to at least consider making a change.
Looking elsewhere is not an easy decision to make, and often there’s an inertia when you’ve used the same vendor for years. But you do owe it to yourself to consider the alternatives.
A rose by any other name?
It’s pretty easy to justify not making a change. Besides inertia and the cost of retaining and getting used to the way another vendor’s application works, there’s the simple fact that most tax prep software is fairly generic. It has to be.
But the vendors themselves are quick to point out that there are differences in the way that their application, or applications, work.
While there have been occasional consolidations over the years, over the past several years, the field has been pretty stable. The major vendors continue to sell a variety of different applications that are all designed to accomplish the same purpose — generating error-free tax returns.
As in the past, many vendors have several applications for you to choose
from. Cch/wolters Kluwer has four 1040 products, Intuit has three, and Thomson Reuters has two. While each has more in common with the other than differences, the differences, even within the same vendor, are enough to allow the vendors to support multiple applications year after year.
Just as circumstances in your practice change, so do the offerings from the major tax prep software vendors. To help you make a decision about the possibility of taking the plunge, we’ve surveyed the major vendors, and compiled a comprehensive features chart to accompany this story ( see page 24).
We also asked the vendors to tell us what they have in the works for the upcoming tax season.
CCH Axcess Tax and CCH Prosystem fx Tax (Wolters Kluwer):
With Axcess and Prosystem fx, CCH has upgraded their diagnostics. Users can now mark diagnostics as “signed-off” and can choose to see all, signed-off, or open diagnostics in their view — speeding up the review process.
Also enhanced is the EFIN Manager, which now lets users view, modify and track their EFINS and vendor control numbers in one central location. New for the upcoming tax season is find/search.
This feature offers a powerful new ‘search return’ field above the worksheet tree that allows users to quickly find where to enter data.
CCH ATX (Wolters Kluwer): Significant enhancements for the upcoming tax season include the new CCH ifirm Client Portal integration. CCH ifirm Client Portal replaces Portalsafe integration, allowing users to securely share files with clients. ATX and CCH ifirm work together to simplify office workflow. Users have the ability to upload tax return PDFS from ATX to Client Portal.
Also upgraded is tax research; ATX now includes both CCH Answerconnect and CCH Intelliconnect integrations. ATX now includes the year in the backup file (e.g., John.atx17backup), making it easier to distinguish between different years when restoring returns. And a new 1099-Q worksheet is now exclusively available to ATX Advantage package customers.
CCH Taxwise (Wolters Kluwer): For next tax season, esignature is being added into Taxwise Online. This gives both Taxwise Desktop and Online the capability to easily capture electronic signatures from taxpayers.
It can add an additional level of signer verification called knowledge-based authentication that asks several questions that only the signer should be able to answer.
Also, this year Taxwise is implementing two-step verification (a.k.a. multi-factor authentication) for both Taxwise products. Two-step verification is an additional security measure that increases security by sending a one-time code that authenticates the user’s identity and the device they are logging in from.
Drake Software: For the upcoming tax season, Drake is enhancing the mobile features of their portal application, Securefilepro, including preparer-client interaction and electronic signatures.
They are also developing a web-based reporting dashboard that will help their customers track KPIS and initiate marketing efforts.
Intuit Proconnect Tax Online: Proconnect Tax Online is releasing features to help ease the concern for tax reform as well as ease the burden of entering the data into the return, with improvements to data import and review.
While it’s still some time before you have to start setting up the practice for the upcoming tax season, it’s not too soon to start thinking about what software you will use next time around.
A new individual tax planner will provide the ability to calculate multiple scenarios based on current and future federal tax rates. Improvements to data import and review will help provide the ability to collect documents from file uploads, mobile screenshots or direct downloads from over 5,000 financial institutions. The data can then be automatically imported into the return for W-2s, 1098s and 1099s.
Lacerte (Intuit): For tax year 2018, Lacerte will build on the training and product updates to help practices manage tax reform changes.
The Tax Reform Resource Center will continue to be the single source for tax law updates. Lacerte is also updating the program for the management of partner ownership data, simplifying the input and reconciliation involved in the transfer of partnership interest. Additionally, Lacerte will continue to build out its e-filing library with several new additions that include Idaho fiduciary, Indiana partnership, Kentucky corporate, Louisiana partnership, North Carolina partnership, Oregon fiduciary, Utah fiduciary, and Philadelphia city filing for corporate returns.
Other improvements and enhancements include improved handling of returns with a large number of cities for states such as Michigan, Ohio, Pennsylvania and Kentucky. If multiple preparers are working on the same return, the staff-preparer filter will help manage workflow across staff. Lacerte will also update the Personalized Training Portal. Search and filter capabilities will be added, allowing users to find desired topics more quickly.
Text transcription will be added to video training modules.
Proseries (Intuit): Key tax reform tools for Proseries users include the Tax Reform Resource Center — access to answers that tax pros and their clients have about tax reform changes, tax reform webinars that will cover tax reform, updates, estimating taxes and more, and detailed tax planning worksheets in the federal 1040 are included in both Proseries Professional and Basic editions.
Proseries continues to build out e-file capabilities with support for all 1040 state extensions (where supported by the state), Philadelphia returns and Nebraska corp, S corp and partnership returns.
Additional improvements include the ability to automatically scale when the Windows DPI is set beyond 100 percent (common on laptops and with high-resolution monitors). This means that Proseries will automatically display larger icons, text, program buttons and other elements of the user interface, all in correct proportion and balance with each other.
Improvements for tax year 2018 include the ability to collapse sub-forms such as K-1 worksheets, asset worksheets and source documents within the forms bar. Also added are improvements to locking returns functionality, including batch printing for locked returns, the ability to e-file locked returns, and locked dates on client invoices and letters.
Taxact: Major enhancements to the Taxact Professional product in 2018 will include an improved sign-in experience, side-by-side comparison of any form type, and tools to project clients’ earnings and expenses for multiple years. New tax forms, including Pennsylvania 1040 local, Ohio generic city and more, will also be made available.
Gosystem Tax RS (Thomson Reuters): Enhancements to Gosystem Tax RS include the ability to process all tax return types within web browsers, new e-file quality control capabilities including banking/payment information, and increased security options including multi-factor authentication using the Thomson Reuters Authenticator app.
Additional enhancements include data import templates that use Excel files with built-in auditing capabilities, and state information being included in the K-1 transfer process.
Ultratax CS (Thomson Reuters): Enhancements include the ability to turn off auto-calculation functionality for any given return, and the option to suppress informational diagnostics that are less relevant to the firm or clients’ needs.
The vendor expects the continued timely release of updates and tools related to reform such as QBID projections and blended tax rates, and increased security options including multi-factor authentication using the Thomson Reuters Authenticator app and MFA being required in order to submit e-files. AT