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Accounting Information > Accounting Tools > Income Tax Software
Income Tax Software

The world of income taxes is quite complicated. It is difficult to remember everything you may ever need to know. For both individuals and professional tax preparers, income tax software can be a great help.


There are many different types and brands of income tax software available. Some are designed with the individual taxpayer in mind, preparing only their own personal income tax return. Others are designed specifically for professional tax preparers, who prepare a variety of different types of returns for a large number of taxpayers. Both offer important features such as updates to upload as needed throughout the tax season, and automatic checks to ensure that there are no math errors.

The income tax software designed for the individual taxpayer is fairly basic. It is normally used by a taxpayer that has only W-2 or Schedule C self-employment income. The software normally functions like an interview, asking the taxpayer a series of questions to determine which credits and deductions they qualify for. This type of software is probably fine for most taxpayers. The capability for the tax return to be filed electronically is normally available on these types of income tax software. These programs can also be used to prepare state income tax returns, and most software programs are also available in a business version for filing partnership or other business entity tax returns.

The income tax software programs geared to professional tax preparers offer greater functionality. For example, this type of software generally has a more extensive depreciation function. There are also certain items added to assist the preparer in completing due diligence. For example, the software has checks built into it to ensure that the preparer asks the right questions and retains the necessary information regarding the earned income credit and any qualifying children.

Income tax software for professional tax preparers normally has many checks and balances built in to ensure that nothing is missed. For example, if the taxpayer ends up with a tax balance due, the software may prompt the preparer to determine if Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, needs to be completed and filed. Software for professional preparers usually contains all of the business schedules and forms, as well as all of the federal and state forms. Of course, this type of software also enables the preparer to file returns electronically. Most professional tax preparer software can be set up to connect the preparer to one of the banks offering bank products, such as the Refund Anticipation Loan, or RAL. This enables the preparer to offer an additional service to the client.

The income tax software designed for professional tax preparers offers many additional features to assist the preparer in running their tax preparation business. These programs often allow the preparer to enter a fee schedule, which allows an invoice to be printed for each client with their return. Some of the programs offer an appointment scheduling/calendar feature. There are also software programs which offer the ability to print mailing labels for the tax returns, and most are able to print a cover letter to give the taxpayer along with the copy of their tax return.

If you need help with your income taxes, general accounting, or financial reporting, you are in the right place. Try out the CPA search feature on this website to find a qualified professional in your area to assist you with all your accounting and tax needs.

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