Tax Prep Software

[Uncle Sam]

Yes taxnj - that's what he's saying about Drake. For example - in New York, there is a city tax that nonresidents pay to NYC if they are employed by NYC government after a certain date in 1973. Even though Drake correctly calculates the itemized deduction schedule for NYS return properly - the corresponding calculation on that NYC return must manually be calculated in order to properly calculate the NYC tax liability.

[TAXNJ]

ddtlee

are you saying that a user would need to realize that they would have to do "calculations" outside of the software and then populate the correct amount and form and line number?

Whereas if one purchases a tax software that may cost more but the software does the "calculations" and populates the correct amount and form and line number?

thanks

[dtlee]

One thing that I will add to Rick's highly accurate comments about Drake is that you need to become accustomed to the inconsistencies of a product that has a very long history of development.

Some things are well thought-out and complete and others are more do-it-yourself. Even simple things can exhibit this behavior. For example, a lot of the complex ACA computations are handled quite well, but you may be baffled if you want the software to figure out what the limitation is on a deductible IRA for a married couple. The evolution of the software is evident in the handling of certain Box 7 distribution codes on the 1099-R form. Whereas at one time nothing was automatically handled by the software in this regard, over the years, a few select ones (such as a Code 1) became handled automatically. A new user, seeing this, might expect all such codes to be handled automatically, which just isn't true.

Long-time users learn the workarounds so well that they use them even when the software changes so that they are no longer needed. New users need to push a lot of test returns through the software to learn what is and is not automatic.

[Lion]

Sometimes the demos are the actual software, but not available to e-file and probably not to print unless you buy and get a code. Sometimes the demos include sample returns of all types to explore. At the very least, you have your own tax info for 2019 to work with.

Who will you be marketing to? Investors? Then explore Schedule D/8949; can you import transactions, for instance. Small businesses/Schedule C? How intuitive TO YOU are all the parts from income/expense to depreciation to OIH to 199A to...? I found some software great for 1040s but clunky for entity returns, which I have in my clientele. I found some software lacking for Kiddy Tax and a couple of other situations that are common in my clientele.

Try out everything. Don't forget to call tech support to see how that works for you. Can you email or chat or ask for a callback at a convenient time? Do they have a knowledgebase you can search? A virtual "chat" to lead you TO KB articles? Which software works the way you work? Will work for the type of clientele you expect to build? Will save you time in your own practice?

[ATSMAN]

I echo what Lion said. If paulcpa does not have a client base of returns that he prepared on another software it makes it a bit difficult to do actual test runs on actual returns with various software to compare.

The demos that software companies provide to prospects don't do justice IMHO.

[Lion]

Yes, TaxNJ, either NATP or NAEA publish an annual survey of tax prep software, rated by tax preparers; probably other trade organizations do, too. It'll give you some info about what's out there and provide contact info to get demos.

I use a lot of pay-per-return to keep the cost down on expensive ProSystem fx.

[TAXNJ]

LION’s reply post provides some valuable suggestions/recommendations.

Also, some Professional Organizations (think AICPA might - but check with them) conduct annual independent surveys regarding tax software companies.

And as LION says “Use all the demos out there to see which ones work the way you work.”

Good luck

[rbynaker]

I'm a current Drake customer and former Intuit ProSeries customer. It's really going to depend on what you want to do with your practice. If you plan to remain a small practice, I would definitely recommend Drake. If you're looking to be the next Big-4 (-6, -8?) accounting firm in 20 years, or if you expect your customer base to be lawyers with K-1s from 17 states, you're going to want something more robust (probably more like CCH or UltraTax).

Customer service: Drake wins hands down. They answer the phone quickly with a human being in the U.S. who can either answer your question or escalate you to a supervisor. My understanding is that ProSeries has outsourced their support overseas and during peak season they have a history of 45+ minute wait times before you even get connected to a human, and often that human can't help you.

That said, in 15+ years as a customer, I never actually had to call ProSeries support (but a whole lot of people complain during busy season on their public forum). ProSeries uses a forms-based data entry system so if you know what form/schedule you want your number to appear on, you go there and either enter data directly or Quickzoom to data entry worksheets. They also have a "Where Do I Enter" button that's quite helpful. Drake uses screen numbers and it's not always intuitive (pun intended) where you're supposed to enter things (but it's really easy to call support and the front line people can answer my stupid "where do I enter" questions quickly.)

Bugs--er, "unexpected behaviors": Let's face it, the tax code is pretty complicated and seems to get even more complicated every year. Every piece of software has bugs in it. Congress and the state legislatures have a habit of passing tax laws retroactively. So even if the software was programmed correctly on January 25th, it might not be programmed correctly on March 1st if Congress or a state passes a retroactive change (in VA we're always waiting for the annual "tax conformity" bill to pass and it's a "good year" if that happens in February instead of April!) So the point I'm trying to make, things are going to get screwed up no matter who you go with. Drake has been very responsive and usually has a patch out within a week (and more often just a couple days). ProSeries takes a lot longer, if you can find someone to acknowledge that there's even a problem (I'm confident that TaxGuyBill will back me up on this too!)

Programming: ProSeries generally does a much better job at multi-state returns. A lot of times with Drake when I have a multi-state return, I feel like it's a glorified typewriter. I have to do a bunch of math outside the software and tell it what number to appear in which box on the state returns. I find multi-state data entry to be pretty clunky with Drake. ProSeries (for better or worse) uses the same calculation engine as TurboTax. So there are lots of worksheets that are designed to help TT users get the right tax result. They have extensive employer stock option worksheets, sale of home worksheets, really just about any Sch D situation you can imagine. A lot of that stuff in Drake I'm doing now in Excel. But the good news, Drake will import from Excel into Sch D/8949. To my knowledge, ProSeries does not have that function. So ProSeries assumes you're an idiot and have no idea how to complete a tax return. Drake assumes you're a competent professional tax preparer. Also, ProSeries calculates automatically as you enter data. Drake has an independent calculation process. So there's a lot of jumping back and forth in Drake between data entry and viewing the calculated return. I prefer the instant gratification of ProSeries but I've gotten used to jumping back and forth in Drake and it's not as horrible as it was when I first evaluated it.

Practice management: While both have tools in this area, I found ProSeries is more likely to nickle-and-dime you with extra charges. Drake has a lot of features included with either no charge or at least a more reasonable pricing structure than Intuit. If I were starting a new practice, I would go with Drake and jump in with both feet for all of their bells & whistles.

If you wait until after 10/15, I suspect you can contact Drake, ProSeries and Lacerte and convince them to give you copies of the 2019 software for you to evaluate. In a non-COVID year, most would have seminars at various locations across the country where you can go for free and see the software in action demonstrated by someone who knows how to use it. Not sure what they're planning for this year. Maybe there's a video you can stream or a webinar you can attend. Don't commit to anything sight-unseen! And I'd personally avoid any sort of multi-year contracts.

This is purely my own opinion, they're a dime a dozen. Really you need to figure out what's best for you based on what you expect will be the needs of your firm and your client base.

Rick

[Lion]

Use all the demos out there to see which ones work the way you work. Test out their tech support with questions; a very important consideration for a sole proprietor. Which software will help you service your expected clientele, plus the type of tax prep service you expect to be five/ten years from now. When you get your short list, then put your reps to work to get you their best prices. Don't scrimp on software, because it's a valuable tool, along with your knowledge/continuing education.

[Brian EA]

I have been using Drake Software for the last 17 years. It's a great software and their customer service is second to none
Thanks
Brian

[paulcpa]

I am starting a tax prep service as a sole proprietorship in January 2021. As I evaluate software, the Intuit products (Lacerte and ProSeries) appear good but expensive. Drake has more reasonable pricing. However, the best price is not necessarily the best product. Does anyone have any advice on software packages?