Tax Preparation vs. Financial Planning Software

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What’s the difference between tax software and financial planning software?

Tax Preparation vs. Financial Planning Software

If it has to do with taxes, you can bet there's a software program for it. Tax preparation software helps you prepare your taxes. There are many different tax preparation software packages, but most function very similarly. The user is prompted to enter income and expense information, the software crunches the numbers, strips them into the appropriate form, and voila! You can either print your income tax return to mail it in or file it electronically. Tax preparation software generally runs anywhere from $20 to $100, depending on whether it includes functions that allow you to do both federal and state tax returns. However, free tax software is available through a partnership between the IRS and various tax preparation software industry leaders. Financial planning software, sometimes also known as tax planning software, is more about strategies to limit your tax burden during the current tax year than performing the mechanics of tax return preparation. Some of the higher-end tax prep software packages do include limited financial planning advice on common tax topics.



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