Author Topic: Tax software - for simulations  (Read 324 times)

johnhenry

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Tax software - for simulations
« on: October 04, 2017, 01:09:20 PM »
For all the other taxcasting nerds on here....

I've been playing around with 2 products for running tax simulations.  Both seem to be FREE as long as you are just using them to run scenarios.  Both of these apps are intended for tax professionals doing tax returns for customers.  They don't have tons of wizards to walk you through reporting so you have to be a little familiar with your tax situation to make sure you get everything entered that applies to you.  But after the initial entry is done.... this makes it super quick to go back and plug in different numbers to simulate different scenarios. 

Tip: If you plan to review drastically different scenarios, you can create different "customers" to represent different stages of your life.  For example I have one customer that basically represents our current situation... current age, 3 kids in the house, etc.  Then another "customer" that represents "our future household" after the kids are moved out, when we are older.  It's easier to jump between "customers" than to go back and delete (and then re-add) your dependents since it requires valid SSNs etc.  The trick is to adjust your(and spouses) date of birth for future versions of your household since some variables are age-dependent.

Another tip: Just to avoid an Equifax-like data breach .... since I don't actually file out of these systems, I don't put in our real address, SSNs, etc.

1) Lacerte Individual Tax (which seems to be owned by Intuit now). 
     Is a desktop app.  Pretty clunky and not super-intuitive, but it does the trick.  This is an EVAL version... but it seems to tally an evaluation towards your total if you run an "analysis", which is a more advanced function.  It seems to calculate all the totals correctly without the need to run that analysis.

2) Intiut ProConnect Tax Online. 
  This one is online.  It's easier to use than Lacerte.  This is not an eval version, but the full software that appears to let you create as many real/fake customers and scenarios as you like.  It only charges you if you actually try to file.  While not wizard-based to make sure you don't forget anything, it does have a "check return" feature that gives you a list of things to make sure you don't leave out.

I haven't found every nook and cranny, but both seem to support partnership returns, estates, S-Corps, etc.

Both systems generate not only a summary, but all the actual IRS forms themselves.  The print functions are disabled.  You can't print the forms, but every form and all the supporting worksheets, etc are there.

Note: These systems can't replace the advice of a good CPA... but if you are like me you don't want to waste (or pay for) your CPA's time with questions like...  In 15 years, if 2 of my kids are out of the house AND we are doing $35K in Roth Conversions AND my wife makes $8000 that year but puts it all in a Solo 401(k) AND we sell (for $70K) the rental on Jones St. that we bought 2 years ago AND we live it FL then.... you get the picture.  This way you can at least do the leg work and just run it by your CPA before you make a certain scenario part of your FIRE plan. 

Anyone have other suggestions for software to do planning like this?  Any CPAs out there care to share cheap/free solutions for nerds who want to run the numbers themselves?

Caoineag

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Re: Tax software - for simulations
« Reply #1 on: October 04, 2017, 01:33:29 PM »
I tend to run scenarios through Taxact. As long as you aren't filing you can play with the numbers quite a bit and its free. Course I am usually running the simulations to determine how not to owe a lot of tax for the current year or whether I can contribute to a traditional IRA but I will be running extra scenarios this year in preparation for my upcoming FIRE. I have to run scenarios every fall due to our variation in income.

johnhenry

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Re: Tax software - for simulations
« Reply #2 on: October 04, 2017, 01:59:35 PM »
I tend to run scenarios through Taxact. As long as you aren't filing you can play with the numbers quite a bit and its free. Course I am usually running the simulations to determine how not to owe a lot of tax for the current year or whether I can contribute to a traditional IRA but I will be running extra scenarios this year in preparation for my upcoming FIRE. I have to run scenarios every fall due to our variation in income.

Ya.... slight variations on the current year are usually easy to test in your tax filing system of choice.  It's when you want to run longer range projections or ones in which you will be a much different situation that the full packages intended for tax pros seem to help.  In most of the individual apps, if you make a change to represent a hypothetical scenario... removing a W-2, removing/adding a dependent, it saves that info and will automatically carry it forward when you file next years taxes.  Then you have to remember and take the time to put back in all of your real data before filing the next year.  Just takes too much time to get the scenario results and has the potential to screw up your data for the next filing year. 

Caoineag

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Re: Tax software - for simulations
« Reply #3 on: October 04, 2017, 02:47:33 PM »
Wouldn't you just create a new account so you didn't mess with your original data or start a revised tax filing for a previously filed year? That's what I always did when I didn't want to mess up my current one (the revised tax filing rather than a new account).

johnhenry

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Re: Tax software - for simulations
« Reply #4 on: October 04, 2017, 04:03:55 PM »
Wouldn't you just create a new account so you didn't mess with your original data or start a revised tax filing for a previously filed year? That's what I always did when I didn't want to mess up my current one (the revised tax filing rather than a new account).

Good point...   Ya, I did create a second account in TaxSlayer using a second email when I first got serious about tax forecasting.  But that requires an email and new account for each "scenario" you want to save :(   Even working in the second "test account" it was a PITA to go change all the baseline variables for each scenario... like the age of self and spouse, deleting dependents, deleting the childcare credits, etc to run a scenario when the kids were moved out of the house.  Then if you want to go back to the scenario where the kids still live at home, you have to type it all back in.... or create another account.  Ditto for a "revised tax filing" of a previous year.  That is a good way to not screw up the live data, but requires changing lots of info if you are running a scenario for several years in the future where date of birth, and other variables need adjusted.

The installed desktop apps (like TurboTax) don't require a separate login per scenario.  You could load up a different file for each scenario. But the problem with them is you have to buy upfront to get the current year's version.  I recall doing some testing with Turbo Tax (Deluxe) I believe and finding it didn't have the forms to handle disposition of real estate.  Not sure if it required Premier, Home & Business?

I wasn't really expecting to find FREE versions of software targeted at tax pros and didn't understand the power and flexibility of using them till I got ahold of them.  The real efficiency (of these "multi-client" apps) comes from jumping between scenarios without having to reenter all the demographic info. 

CareCPA

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Re: Tax software - for simulations
« Reply #5 on: October 05, 2017, 10:22:02 AM »
I would think the biggest challenges with projecting that far out (15 years in your example), is that we're making the assumption tax laws will remain substantially unchanged. You also have to make educated guesses about standard deductions and personal exemptions.
Not to turn this political, but given the push recently from both sides, I would be surprised if the tax landscape in 15 years is the same as now. I can't predict which way it will go, but I anticipate some change.

To answer your actual question, a lot of the more expensive tax software options will allow for projections, but I've only tried for a couple years in the future.
I've also used BNA tax planner at a previous firm, although I assume it was pricey.

For free solutions, short of building your own excel models, I would think the way you're currently doing it would be the closest.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

retired?

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Re: Tax software - for simulations
« Reply #6 on: October 08, 2017, 11:04:24 PM »
Wouldn't you just create a new account so you didn't mess with your original data or start a revised tax filing for a previously filed year? That's what I always did when I didn't want to mess up my current one (the revised tax filing rather than a new account).

That's my approach.