Mark Washburn
Make Your Tax Software Work for You

Four tips from an experienced tax practitioner.

May 14, 2009
by Mark Washburn, CPA/MST

Professional tax preparers have a wide variety of tax preparation software from which to choose. While many of today's partners and senior management easily remember the days of manual-prepared returns, most anyone hired in the last 10 years is probably more computer literate than their employers! For the experienced tax professional, changing from 13-column green paper to Excel spreadsheets to tax preparation software has been quite the evolutionary process. For the more recently hired employees, it isn't so much about the transition to software as it is the way a specific program operates.

If you work at a firm run by others, you probably don't have much say on which software package the firm chooses. After a few years' use, a level of entrenchment occurs in which — for better or worse — prohibits changing from one tax software package to another.

Tips on Selecting the Proper Software

If you are the decision-maker in your firm, here are some thoughts about selecting a package or changing to a new program.

  • Find a software package that provides a user interface with which you are comfortable. Most professional grade tax software provides various ways for you to enter data. If you are most comfortable with direct entry onto the official government forms, make certain the software you purchase provides that capability. If you send clients an organizer prior to each tax season, you may want a software program that allows data entry into worksheets based on the organizer forms. This is particularly helpful when you have new employees each season who may be unfamiliar with the actual preparation software you use. Your new employees will be able to enter data from the organizer directly to a worksheet that looks like the organizer page itself. This worksheet transfers the data to the appropriate IRS form or schedule without any extra effort. As their experience increases, the particular interface used by each employee can change based on personal preferences.
  • Don't chase after the big-name software programs just because that is what the big name firms use. Examine your client base to determine what forms and schedules you will need to complete their returns. If your clients have state tax returns to file, make sure that your software can accommodate this requirement.
  • Examine the pay for use options available with most tax software packages. Do a cost/benefit analysis to see if you will use a particular module enough to purchase it. If not, keep your costs in line by using the pay to use option.
  • Test your software in key ways to determine if it sends the data to the correct forms. Fortunately, we no longer have to worry much about the numeric accuracy of professional grade software. For example, if you use embedded workpapers — sometimes referred to as "smart sheets" — to prepare certain forms or schedules, test them to make sure the data appears on the correct form in the correct location. I have clients who have numerous Schedule D transactions and it is important that the "smart sheets" send the data to the correct part of Schedule D, either Part 1 for short-term transactions or Part II for long-term transactions. Another form to test is your depreciation schedule. Make sure the form allows for all last-minute changes to depreciation rules, such as temporary special depreciation deductions and make sure the calculated depreciation is correct as well.


Tax software comes in a variety of forms. Of course, most people automatically associate tax software with tax preparation software. However, there are other forms of software that are just as useful to the tax practitioner. For example, if you live in an area where oil and gas accounting is important, you need to make sure that your tax software can accommodate this issue. The trucking industry also has special tax requirements. Therefore, if you have clients who are involved in the trucking industry, your tax software needs to have the capability to address their unique needs.

One of the most important pieces of tax software I utilize in my practice isn't tax preparation software at all. Instead, it is utility software, which provides a variety of workpapers, decision trees and tax forms to assist you whenever difficult or unusual circumstances show up. Some clients understand information better if presented in a visual format rather than verbally explaining issues to them.

One particular utility software that focuses on tax issues helps in these situations. Instead of explaining a difficult-to-understand tax topic beginning with the general rule and working through the exceptions, I use the utility software with its graphical presentation. We work through the decision-tree questions and get a resolution to a question. The resolution can be printed and given to the client for their reference. Because of this software, the client finds the decisions less arbitrary and based on the actual tax law. Even if the resolution is not in their favor, they are more satisfied because they can actually see how the answer was obtained.

If you are extremely happy with your current tax preparation software — congratulations! However, if you sometimes wonder if there is something better out there, now is the time to explore these software packages. The tax software industry is highly competitive and most vendors are more than willing to provide trial versions of their software for evaluation purposes.

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Mark Washburn, CPA/MST, is a Senior Lecturer in Accounting at the University of Texas at Tyler. He teaches both Individual and Corporation tax courses at the undergraduate level. He is a certified public accountant licensed in Texas and holds a Master of Science in Taxation from the University of Texas at Arlington.