Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/160971
Reviews For Your Firm TAX PLANNING SYSTEMS REVIEW SECTIONS BASIC SYSTEM FUNCTIONS • General navigation/ease-of-use • Multiple concurrent users • Multi-client management/setup • System customization CORE TAX PLANNING FEATURES • Years of projections/planning/ prior year • Scenario comparisons • Special: MFS-MFJ, Estimates, Lump Sum, AMT, ACG • State planning support (resident & non-resident) REPORTING • Customizable reporting • Client-ready communication/ reporting • Report output options • Portal/DMS/email integration IMPORT/EXPORT/ INTEGRATION • Data import capabilities • Integration w/tax applications • Tax law research options • Export to common fle formats HELP/SUPPORT • Built-in support features • OS compatibility • Support website/documentation • Live Support By Dustin Wheeler, CPA Dustin Wheeler is a Las Vegas based CPA and QuickBooks ProAdvisor providing tax, audit, accounting, and technology consulting services. He blogs about technology and accounting at www.dustinwheelercpa.com. Income Tax Planning Takes More than a Magic 8-Ball O n the conference room shelf of a CPA's office I visited recently, I noticed a Magic 8-Ball with the label "free tax answers." When turned, the die foating in colored liquid inside the ball presses against the window to reveal an afrmative, negative, or non-commital answer such as "cannot predict now." While I found the CPA's 8-ball to be a clever joke, serious tax planning in uncertain times ofen takes a similar approach. A Magic 8-Ball with phrases customized for tax accountants would contain statements like "if tax rates go up" and "if Congress extends current tax law." Although some tax law changes may seem to be more predictable than others, I've learned to expect the unexpected. For example, who would have guessed that Congress would allow the estate tax to lapse in 2010? Tax planning reached unprecedented levels of difculty near the end of 2012 as the United States approached the fiscal cliff. At the time, the potential expiration of the Bush tax cuts along with the expiration of many other p rov i s i o ns l i kel y c au sed many accountants to advise their clients to do the opposite of traditional tax planning. Strategies included accelerating income and postponing expenses to avoid signifcantly higher tax rates in 2013. Afer months of debate, Congress passed the American Taxpayer Relief Act of 2012, resulting in lower tax liabilities for many taxpayers than had we gone over the fscal clif. Unfortunately, some accountants spent the New Year's Day holiday studying the new tax laws. 2013 Reviews of Retail Point-of-Sale Systems In this review, we looked at 4 income tax planning systems. • BNA Income Tax Planner • CCH ProSystem fx Planning • Intuit Lacerte Tax Planner • Tomson Reuters Planner CS While today's professional tax planning systems can't tell you what future tax law is going to be, tax accountants can extract useful information from them for developing tax strategies. With the help of these sophistic ate d s o f t w a re pac k age s , accountants can project tax liabilities several years into the future under multiple scenarios. Each scenario may co n t a i n v a r y i ng amounts of income, deductions, carryovers, dependents, exemptions, credits and other quantifabl e d eta i l s f ro m ta x returns. Accountants can adjust each scenario for anticipated tax law changes, such as standard deduction and exemption amounts, expiration of tax credits, and various tax rates and brackets. These tax planning systems can generate reports helping taxpayers weigh the impact of earning additional income or making additional deductions. For example, conversions of traditional IRs to Roth IRs have been a popular tax planning strategy since the limits based on modifed adjusted gross income and taxpayer fling status were removed for conversions made after December 31, 2009. With the help of the sofware, accountants can produce professional-looking reports, assisting clients to make an informed decision between converting to a Roth IR in the current year or in subsequent years. An example of comparing one-year scenarios is a client who wants to know the tax implications of holding an appreciated stock, selling it, or donating it to charity. Chances are that tax planning sofware will calculate the tax for each scenario more accurately than an accountant can in his or her head and more easily than on a spreadsheet. Some of the tax planning sofware reviewed in this section contain advanced tools for handling complexi- ties with your individual income tax client base beyond calculating federal income tax, such as estimating state and local income taxes, integration with tax research programs, as well as charts and graphs. Also, some programs import data from tax preparation software, resulting in signifcant time savings. Most importantly, tax planning software empowers accountants to perform value-adding activities like analyzing clients' future tax positions and reducing tax liabilities. Where traditional compliance services may be viewed as overhead, efective tax planning can turn tax accountants into superheros in the eyes of their clients. Although there is always some degree of uncertainty in tax planning, tax superheros don't use the Magic 8-ball. Tey stay current on tax law changes, are informed about pending tax bills in Congress, and use their tax planning systems to their full potential. ● September 2013 • www.CPAPracticeAdvisor.com 9