No one ever said choosing the perfect tax preparation software was easy. You may have tried one package; you may have tried several. Over the years, you’ve learned that the must-have features for one preparer may not matter much to another.
We can all agree, however, that what’s important is having a software that satisfies both your business needs and your budget. Finding the balance is key, but for many small practice owners, the increasing cost of tax software is a major concern.
Each year, NATP asks our members to rate the tax preparation software they currently use in terms of affordability, availability, usability, reliability, support and accuracy. We’ve compiled this year’s results in an easy-to-read report with all the details you need to see where your software stacks up or get ideas for exploring other options.
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More about tax software packages
Software packages generally come in two formats. The form-oriented style allows the preparer to complete the return in front of the client, many times with supporting worksheets to list the components that make up a line entry. The preparer is usually able to view the return on the monitor, as it would appear on paper.
Worksheet-oriented programs are set up differently by each software vendor. A preparer who is used to working with forms may find this type a little more difficult at first. Some programs allow a ‘heads down’ form of data entry that requires only a code number for the data field on the worksheet followed by the numeric and/or alphabetic data. This capability allows a skilled 10-key/typist to enter data without being concerned about matching the data fields on the screen with those on the worksheet.
Price is always a crucial consideration. Some software companies include corporation, partnership and fiduciary software, laser software and related state programs for one price, while other companies list them separately. Most software companies offer discounts based on the date the order is placed. Be sure to research what extra features are included in the price of software.
The availability date is another important factor. The earlier you receive the package, the more time you’ll have to work with it before the rush of tax season arrives. Pending tax legislation or legislation passed close to the end of the year can affect the release of forms, which will affect the availability date of some programs. With most packages providing web-based downloads for updates, late-breaking legislative changes are less of a problem. The faster your Internet connection, the less time you’ll spend downloading updates.
Changing tax software packages can be more difficult than choosing one for the first time. Many software providers have conversion programs that convert the data from your old program to their program. Just like any other software program, conversion programs may contain bugs. Be sure to verify that all information has been transferred correctly.
Remember, as a paid tax professional, you are responsible for the accuracy of the entire tax return, including the correct reporting of all income and expenses. It’s important to keep in mind that tax software is not infallible. It’s imperative that you understand the complicated rules of alternative minimum tax, net operating losses and the domestic production activities deduction, to name a few. Some software may require complicated calculations before the correct deduction is entered on the tax return. Relying only on your software and not your knowledge could be a critical mistake.
Access the full 2023 software survey
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.