Tax Software: The Good, The Bad and the Ugly

by Kathleen Hoffelder, NJCPA Content Editor – January 5, 2018
Tax Software: The Good, The Bad and the Ugly

Fast, reliable tax software during the busy season makes life for tax accountants, senior managers and even the interns in a public accounting firm a more pleasurable experience — that is, when things work smoothly.

If clients are satisfied, there can even be some sort of a Feng Shui that exists in the office — albeit just for a short time. But, inevitably, at tax time, tempers flare, systems shut down and files get locked. And accounting professionals look to their tax software for help.

More than 40 NJCPA members with a tax specialty responded in September and October 2017 to a series of questions to gauge the effectiveness of their current tax software, what works well, what are the disadvantages and what is noteworthy about the products. Table 1 is a summary of the most common tax software used by respondents.

Table 1 - Tax Software Used by NJCPA Members

Software Advantages Disadvantages Comments
Wolters Kluwer
Simplicity Lack of speed; lacks customer support
Upgraded its platform which was challenging for some
CCH® Prosystem fx® Tax
Does well with carryforwards, such as NOLs; easy to use; integrates with other software; state instructions; diagnostics; can do complex returns
Expensive; long learning curve; not user friendly
Excellent technical support
Drake Tax
Drake Software
Cost; customer service; product quality
Learning curve can be challenging; no overrides are available
Great customer service and tech support
GoSystem Tax RS
Fast; treats income and deductions correctly; user friendly
Lacks customer support Wait times to receive help can be excessive
Intuit lacerte
Good use of tracking items by years; carryover of losses and credits; accuracy; easy to use; logical; can handle complex returns; offers all states
High cost; does not do state inheritance and estate taxes; speed
Customer support is sometimes lacking; too expensive compared to peer software packages
ProConnect Tax Online
Intuit tax-online
Easy to understand and maneuver through forms
Long wait for chat help online They need to respond with actual people
Intuit proseries
Fast and accurate; great job with error checking; simplicity
Expensive; poor customer service; not cloud-based
Not many enhancements; suggestions are not considered
Forms-driven Some data entry problems; counterintuitive for K-1 entry
Tech support is very good
Integrates with accounting software; comprehensive; easy to
use; multiple states
Expensive; lacks good customer support
User friendly and more comprehensive than some others

Overall, survey respondents have used their current tax software for more than three years, with some boasting upwards of 10 to 20+ years with the same product. And once a tax professional liked a particular software, they tended to use it again at another firm if they switched jobs. For example, several respondents noted multiple uses of the same product at different firms. This is attributed to their ease in using the product and whether a company upgraded from desk­top versions to online versions.

Cost is always an issue with tax accountants. Many respondents noted that the more sophisticated products do come with a hefty price tag; some still would choose those products, however, just because of their performance. A high price seemed to be acceptable only with exceptional specialty offerings. 

Accountants, as with any professionals using a specialized software, demand a certain amount of technical support from their software company. For the most part, respondents generally had a positive connection with the software maker, which kept them using the product. Online chats were cited as a double-edged sword, however, since users often received a quick answer to a specific question but then found out about other changes to the software of which they were not aware.

Automating and Efficiency 

As more mundane accounting tasks go paperless, respondents cited automation as something that will change the day-to­day functions of accounting and free up more time for those tasks that are more forward thinking. Tax accounting itself may not get more automated, but the data entry side is likely to be more automated, says Joseph C. Maida, CPA, MBA, CGMA, principal with Maida Mackler LLC. “There will be more electronic data interchange to capture taxpayer data, so that will speed up the process.”

“Many have tried optical character recognition [OCR] to speed up or even import tax documents into software,” he explains.  But without a 100-percent guarantee, Maida notes that a firm can spend just as much time reviewing and fixing imported data as if it was entered manually in the first place. To him, “some areas work better, such as brokerage imports as they use a standard data structure, but bank and wage information is in too many formats.”

Automating staff schedules also helps during tax season. “One of the ways we’ve best streamlined our busy season workflow is by using a scheduling system that has the ability to integrate both the calendar budgeting and the scheduling of jobs along with the workflow of the deliverables,” says Colleen Luzaj, CPA, controller at Untracht Early. This also helps gauge actual versus budgeted time. “We find that it’s essential to be able to extract information from your scheduling system that helps you determine your firm’s capacity and project what your staffing needs will be.” 

Software Wish List 

So what’s needed? In a word, “better” software. As Trina Weingarten, CPA, principal at Weingarten Associates, notes, “I am still waiting for a truly cloud-based version. I have searched, and there is no exact match for what I am looking for.”

She also would like a better way to download information from W-2s and 1099s as well as a truly online tax organizer. “Once clients can fill in online and it populates pieces of the tax return, the tax organizer should allow the client to view last year’s numbers next to the numbers they are entering, for point of reference,” Weingarten adds.  

Other kinds of innovation would be useful for Maida. “If we could design better software, we would like to have more than one user in a client’s file at the same time. While I understand the need to lock changes, sometimes things are so complex that having two people doing data entry would really be a time saver,” he says. “Most of our other software allows a collaborative approach to data entry and problem solving.” 

Similarly, Walter E. Ramick, Jr, CPA, principal at Zweig, Ramick & Associates, also would like software to keep up with the changing needs of accountants. He prefers the “ability to drill down to the specific input(s) for any particular item.”

This article appeared in the Jarnuary/February 2018 issue of New Jersey CPA magazine. Read the full issue.