Tax Prep Software

[ATSMAN]

I came across some old modems and it brought back memories of dialing up Nelco to efile !!!

I still have my Hayes 2400 Baud external modem and it still works though I can't do anything with it.

[paulcpa]

Thanks to everyone for the replies. I've seen the AICPA survey results mentioned by rbynaker but I wanted to hear directly from practitioners. The comments are very insightful.

[Twin Turbo Z]

And once the HP Laserjets came out with the tax font cartridge, things go alot better. But boy those printers were an arm and a leg !! Any of you pc builders remember "Computer Shopper" magazine. Magazine was the size of a small car. First PC we bought was a Gateway. Its was their 1st or 2nd year of business (1985 or 86). Second PC I built. From there on I built every PC we have used. I came across some old modems and it brought back memories of dialing up Nelco to efile !!! I never get rid of those old PC's or the software. Oh how the times have changed !!

[ATSMAN]

I started out in the mid eighties doing the same thing, I use a software call RAM, probably one
of the best software at that time, only problem was the whole program Federal and all states
where on one 3 1/2 floppy disk, people just couldn't believe a program on one disk could be
very good.

Back then there was another tax program called EZ Tax that was quite popular and a bunch of Lotus 123 based spreadsheets that accountants developed and sold them as shareware. You could modify the spreadsheet as you wished. My first HD was a 10MB external that started with the noise of a MAC truck!

[Gene V]

. Had to use “dot matrix” printers to print the tax results and slide the output into plastic overlays of tax forms and then put the overlays on the printer one by one!

I started out in the mid eighties doing the same thing, I use a software call RAM, probably one
of the best software at that time, only problem was the whole program Federal and all states
where on one 3 1/2 floppy disk, people just couldn't believe a program on one disk could be
very good. They eventually sold out (can't remember, I think LMS then Ultra Tax end up with them)
I use Lacerte now and very happy with them, except for the price.

[TAXNJ]

They got bought out by Best Software, then Intuit bought them. So we have been using Proseries ever since.

Best Software. Have not heard that program name in years. Had to use “dot matrix” printers to print the tax results and slide the output into plastic overlays of tax forms and then put the overlays on the printer one by one!

[Twin Turbo Z]

Started out with CPAID many many moons ago. They got bought out by Best Software, then Intuit bought them. So we have been using Proseries ever since. I love the forms based system, seeing how we use to do returns by hand, before software became "good". But Proseries does have a "data based entry mode too. I ***** and complain about support also, but in the past 20 years or so (too old to remember how many,,alot), I had to call only a hand full of times. And its always a state issue or printing issue. That said I like the GUI of Proseries. Drakes GUI is clunky, and we demo it every other year. Yes Proseries is more, but if you do alot of returns, Proseries is hard to beat at its price point.

[rbynaker]

Since your username ends in cpa, I'm guessing you've already seen this, but here's the AICPA's annual software survey results:

https://www.journalofaccountancy.com/issues/2020/sep/tax-software-survey.html

Rick

[ATSMAN]

I only need technical support from my tax software vendor at most between once and twice per year on average. So no, it's not Drake. Why would I want to have to call support very often? Or put another way, why do so many Drake users know the time it takes to answer a phone support call?

If you don't have to call technical support that is great news. In a typical tax season I may have to call them once or twice also when some calculation does not appear right or some input field moved, or the report is missing some data??

Loyal Drake users like the fact that their technical support team respond very promptly compared to other tax prep software vendors. Perhaps it is just peace of mind knowing some vendors take days to even respond that they received your question. Just go to any tax forum during tax season and read all the posts.

[Rapid Robert]

I only need technical support from my tax software vendor at most between once and twice per year on average. So no, it's not Drake. Why would I want to have to call support very often? Or put another way, why do so many Drake users know the time it takes to answer a phone support call?

So far this year, I reported a minor bug in a California tax worksheet in writing (online chat/email), and they responded timely and fixed it within a few weeks, as I recall. It's the only time I needed support so far this year.

[ATSMAN]

dtlee provided an excellent summary of Drake. I am sure there are other members who know ATX, ProSeries etc. inside out and can comment.

IMHO you will never find a tax software that will work 100% of the time for all situations. It is just unrealistic. I look at software evaluation with a cost benefit analysis that fits my business model. I don't do medium or large C corporations, or HOA returns or K-1 from a dozen states for investors so I am not too concerned with them. My bread and butter returns are your typical 1040 returns with Sch C, E, F and some 1065 and a few 1120S returns.

I see a lot of posts on other forums, folks bragging on high end tax software because it does everything! Then they complain how much they are paying for it every year!

[dtlee]

Drake does supply two levels of messages which are basically errors and warnings (though I think they call them messages and notes). The warnings will generally tell you where the tax software has made an assumption (note that it is not an assumption that a code 1 is subject to the penalty, that is by definition). However, it has shown an increase in the number of warnings that "newcomers" seem to need. For example, one of the things I saw in UltraTax is that when you leave box 2a of the 1099-R blank, it assumes that the taxable amount is zero unless you tell it otherwise. Drake assumes that this blank means that the issuer did not know the taxable amount and will default to all of box 1 unless you tell it to do the calculation for its taxability. They warn you that they did this.

They also warn that some amounts may need additional input to determine impact on the return. Long-time users complain about the number of messages (e.g., it may tell you that the 91 year-old dependent is not eligible for the Child Tax Credit under certain circumstances....seriously, you could have entered the birth date incorrectly, but after the first few years, you start ignoring some messages).

Personally, I like the software and have used it for over 20 years. I have used other packages, but in a straightforward situation where the individuals and jobs were on the return in the prior year, I have seen no software which is faster for inputting a return. I find it lets me concentrate on the issues the taxpayer may be facing or planning discussions in these situations.

One feature that they rarely emphasize in their literature is their "macro" capability. This is definitely not the first thing you want to investigate, but it can make up for some of the quirkiness of the software. For example, while some details are drawn from setup information, I use a macro to check my favorite boxes or input the periods I usually want to include when I prepare Form 2848. I also use it to get a return ready for Federal and New York extensions; one keystroke combination and the result is a return that is ready for an extension without a payment. Other software packages have features built-in to make that process easier, but with the macro capability in Drake, you can almost duplicate that ability.

Another feature that is useful (though, of course, quirky) is the ability to split a Joint Return into two separate returns. For New York and Ohio, the savings often comes from the state return, so the fact that this feature creates a full return including the state (that you can review and tweak as you desire) gives you the ability to truly evaluate (along with the client) which filing status is more desirable. The function is not 100% perfect and relies on how diligently you identified joint versus individual items of income and deduction, but in its raw form can be very useful as a starting point.

I have left out some of the gotchas I have learned over the years, but most of them are well-documented in posts in their private forum, which Drake customers are invited to join.

A suggestion might be to try Drake with some simple and more complex returns in their trial version and perhaps purchase a more "complete" package in a pay per return mode as a safety net for your first season with it.

The software is quirky, but their support staff is remarkably good considering how many individuals they have added over the years. One thing that no one has mentioned is that the support team that answers the phone (first level) is both knowledgeable about the product and tax law. Many of their employees in tech support are actually Enrolled Agents and they also have both EAs and CPAs supporting the support teams. The biggest benefit is that you don't have to explain what a capital gain is or what an installment sale is when you call and want to ask how to input something.

Not a perfect product by any means. Quirky with a capital Q, but generally quite competent.

[TAXNJ]

Uncle Sam and dtlee

thanks for the education. Heard many good comments about Drake concerning price and functionality.

Would Drake show an "error" so to inform the user would need to do "calculations" outside of the software and then populate the correct amount and form and line number?

Realizing that not all software programs are perfect, but for some the less "outside" calculations one must perform the better it is to pay for a more expensive software especially during tax season to avoid time lost and having to educate one on the outside calculation? No?

[dtlee]

U.S. brings up a good point.

Certain states are better supported than others within the software. I forget which state it was (I think it was Arizona) where I had indicated that the taxpayer was a part-year resident of multiple states (in my case, part-year in California and part-year in Oregon) where the taxpayer was a full year nonresident of Arizona with Arizona source income for the time living in California. The Arizona software (if I remembered the state correctly) insisted that if someone was not a full year resident of one specific state, they had to either be moving into or out of Arizona and could not be an Arizona non-resident. I was able to ultimately get the returns prepared properly, but it was not straightforward.

New York, New Jersey, and California are pretty good. In a test I did a number of years ago, I caught errors in several other vendors' software by putting the North Carolina returns through Drake (they seem to know their home state quite well). The form U.S. describes is the New York City Form 1127 which Drake should handle well, but, since they rely on government documentation for their interpretations, have not figured out yet.

[dtlee]

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

Not exactly.

In the situations like I was alluding to, a code 1 would automatically impose a 10% Federal (and 5% California if applicable) penalty. Likewise, some codes may indicate that the amount is not taxable and the software will not include it. (Both of these scenarios able to be overridden if the circumstances so dictate.) However, in other situations, an amount on that form may be generally nontaxable, but the software does not automatically exclude it, so the preparer, knowing this, would need to check a box indicating how the software should handle the distribution. It appears inconsistent that if several codes generally imply the same thing, that the software would not have the same default behavior for all of them.

Other software may pop up a set of questions in these scenarios to precisely determine for the preparer how it should be handled. Drake often assumes that you know these rules and can decide for yourself what and does not need to be included and generally will not drag you through such questionnaires.