What You Need To Know For Automating Your Tax Documents?

Three out of four people who use tax software said they love the idea of the ATR, (known in the tax preparation and accounting industry as Automated Tax Return). For people that use certain financial software for their accounting, the proposition looks promising to save time and hassles to file their tax returns. There are ten questions to ask when considering automating your tax document, however.

The way Automated Tax Return or ATR works is that it would easily transfer information from Quicken, QuickBooks and other financial software with an import program that fills in blanks on corresponding lines in the various tax documents, from financial software programs. This means that interest you paid on your mortgage would automatically flow to the corresponding line on your tax return, along with lender information for filing taxes. The income numbers from your W-2's would automatically flow from the payroll company into your tax document, and so on. This still leaves ten questions to ask when considering automating your tax document.

Payroll companies, Stocks and Mutual fund companies would have W-2's and 1099's in this same automated format and the Automated Tax Return would fill in capital gains information from brokerages on Schedule D or interest and dividends on Schedule B. Essentially, all the information that pertains to filing a tax return would flow into this ATR format and your accountant could file tax returns quickly after a brief review. This saves time of inputting these numbers from paper documents because they would automatically import, but there are still ten questions to ask when considering automating your tax document.

For those that think this is a promising tax preparation option, it might pay to consider these ten questions to ask when considering automating your tax document:

• Will my employer or payroll company be participating in the ATR format by filing electronic W-2's?
• Will I need to get a certain type of financial software for the ATR tax document to work correctly?
• Can I file my own taxes because everything will be done electronically?
• Do I still have to save all my receipts and sort through documents for tax write-offs?
• Do I still need an accountant or CPA to help me with my taxes?
• Will there be some things that ATR won't complete for me?
• Do I have to be concerned with filing a tax return since everything is done electronically?
• Won't ATR mean that my taxes can be done in a matter of minutes instead of hours and days?
• Will there still be some items that might not be available in the ATR format so I will have to complete them the old-fashioned way?
• Will I eventually find that my accountant is using the ATR format for filing my taxes and everybody will be filing them this way?

The answer to the ten questions to ask when considering automating your tax document is, "Yes". As we go towards a paperless society, you will find we are headed towards the simplicity of a ten-minute tax return. The thing to keep in mind is that you still need to be prepared for mistakes in the system and this has been in the works for a number of years, so hold onto those receipts and W-2's until your accountant tells you otherwise.

By: Loretta Valero-Smith

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Loretta Valero-Smith owns and operates the leading Tax Preparation Boca Raton company. With over twenty years of experience, they are reputed as subject matter experts on Taxes in Deerfield Beach and Pompano Beach and Condominium and HOA bookkeeping in Boca Raton.