Tax Planning Software – Artificial Intelligence or Skill Saw?

By Dominique Molina, CPA MST CTS

Have you asked yourself, do I really have to study tax planning?  Can’t I just select a software providing Artificial Intelligence to inform me what to do?

If you’ve read my articles about tax planning before, no doubt you’ve read my description of tax planning software as an instrumental tool. It can provide valuable insights such as data extracted from your tax returns, calculation of minimum required estimated tax payments, and even a few tips to save annual tax. 

But the answer to this question may be more similar to TikTok viewers of DIY household construction projects asking “Does the job require a Router or a Dremel Tool?” Whether you are a do-it-yourselfer braving a construction project in your home or a new business owner or novice tax planner, the answer really depends on the nature of the job you’re doing. 

For example, is it possible for this experienced tax planner of more than 20 years with an advanced degree and thousands of tax plans to complete a bathroom remodel in just a weekend with a Dremel tool? Certainly. I’ve even got the pictures to prove it! 

Before

After

Just like the ‘bathroom-in-a-weekend’, it is possible with an off-the-internet software to develop a few ideas to save some tax dollars. But if you look closely at my personal photos, you’ll soon notice the glue expired on my “driftwood” mirror frame, the recycled wood tiles failed to stay up with the shower moisture in the air, and while the dimensions of my replacement countertop were correct, the walls were just a hair too uneven in my old house so the countertop didn’t fit snugly. 

In the end, my DIY weekend project took more than four weekends of my precious free time, more than $1,200 in the after-the-fact hired help to fix my handiwork, and a little of my pride revealing this online to a public audience. 

It’s Just a Tool! 

I was so excited when Flowbee, the vacuum cleaner attachment made for cutting hair, launched its infomercial on TV. It all seemed so simple! Simply set your length and go to town, avoiding the mess that even the best hairstylists create in making a masterpiece. 

While I didn’t have the courage to try it on my own hair, logic overruled my excitement when I pondered why this contraption wouldn’t immediately put every hairdresser, barber, and exhausted mom on a budget out of business. Flowbee couldn’t replace the creativity of a trained expert. It simply could not exercise judgment or interpret the nuances of someone’s preference for ’70’s layers or bangs or sideburn lines. 

The same is true for tax planning software! There are many choices out there.

  • Some accommodate a menu of tactics and include boilerplate rules about how to use them.
  • Some use your tax bracket and past tax return amounts to estimate potential savings using “fill in the box” amounts or maximum thresholds.
  • Some even still include checklists and project management portals to allow you to cross off your tax planning “to-do list.”

I’m not suggesting these aren’t valuable modules to assist you in your tax plan design. However, just like the Flowbee and my handy Dremel tool, these are just tools and cannot replace the knowledge and experience of expert training.

  • An expert will use projection and reporting tools and portals and checklists to optimize their tax plan.
  • An expert will use their experience to evaluate the nuances and complexity of their clients’ tax layers, and determine what are the best solutions.
  • An expert understands the complexity of court cases and law and how they apply to your specific circumstances, and they’ll be ready with full documentation and audit preparation in the event a tax authority scrutinizes your positions.
  • And a trained expert has their clients’ trust that is so essential to helping clients make the changes necessary to capitalize on all the opportunities available to them.  

You see, the IRS doesn’t accept “the software suggested using this amount” as a valid reason when they grill you about which law you’ve relied on for your position. 

While software, like a proper saw, can act as a tool in your project, the most important part of the process is the expert you rely on for advice. This can be uncomfortable for some tax professionals who want to offer tax planning, yet lack the background or education. Unfortunately, our ability to decrease our clients’ taxes using laws, loopholes, credits, and deductions is not a minimum requirement to enter the field of practice. And the IRS won’t come tap you on the shoulder when you missed out on what you could have done in the past and issue a refund.

What I’m trying to say is if you want an attractive bathroom while enjoying your free weekends and saving money, hire the expert who knows how to use the skill saw. Or invest in the proper training to attain the expert skills yourself. Either way, your wallet (and most likely your family) will thank you for it.

Ready to learn those expert tax planning skills? Then become a Certified Tax Planner today and join our supportive community to learn everything you need to know to change the lives of your clients and build the practice of your dreams. 

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