Tax Software for Investors and Tax Software for Financial Planners.

About Using Detailed Tax Software in Financial Plans

About Estate Planning and Estate Planning Software
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About Using Detailed Tax Software in Financial Planning

First, here's an important bottom line: In Jan '13, tax rates changed. With all of the financial planning software on this site, you could have made the update to the new rates with one input.

With most other code-based vendors, you have to wait weeks, if not months, for them to update their code. Then hope that it's correctly done and then deal with all of the bugs, delays, and subsequent bug fix patch updates caused by that.

Then as you can read below, if you've been using other vendors' software, everything you've done in the past regarding tax, cash flow, and retirement projections is now wrong, and needs to be redone.

So unless you can get your clients to pay you again for enduring this annoyance, you're stuck working more for free, just because you think you need financial plan software to perform this function.

Okay, so you know there's a big election this year. It's either gonna be Hillary or Trump.

Now if you make a NaviPlan today, it's going to make detailed tax assumptions going forward using current tax rates.

You really think tax rates will be the same in 2018 that they are now? No way Jose. If Dems get elected with a Dem Congress, then taxes will be going waaaaaaaaaaaaay up. If Trump, then probably way down.

So whatever you do in NaviPlan will be WRONG after a year.

With our system, you can just change the assumed tax rates in any year. So you can model both scenarios side by side (AKA as a version comparison). You can't do any of that with any other planning software.

Then, most of these vendors are barely surviving as it is. So they'll have to spend resources paying their uber-expensive code programmers overtime to update their code. The problem with that is they're not happy campers in this environment, and think they're underpaid as it is. Now because they're probably on salary, and don't get overtime pay, this makes them even more unhappy because they're working much harder, longer, and faster for free too. Unhappy tech campers tend to bail and move on to industries with much greener pastures.

So that drains non-existent resources from everything else, causes a whole chain of event problems, which is never any good in any way for you.

So look for them to be significantly raising their prices after their next few rounds of "updates," because this is the only way they can pass the buck onto you to keep their deals profitable.

TurboTax is still the most popular tax software, so you can just print those reports and use them in your financial plan. You can also integrate their bottom-line annual tax numbers manually into our cash flow projector for maximum accuracy. Then they'll flow through the rest of the plan.

Most financial plans don't have a detailed tax analysis, because the chances of tax laws and rates being the same even five years out are slim to none, and Slim left town.

So whatever you present will be wrong and not even close most of the time.

Then note that most vendors' tax modules don't even account for tax indexing. Tax indexing started in 1986, and makes it your annual tax bill decreases roughly by the inflation rate every year. So if you make the exact same AGI every year, then your taxes automatically decrease by the previous year's CPI percentage. So if you're seeing incomes increase by 1%, and taxes going up 1%, then they just didn't bother to program any of that reality into their code. Federal taxes should have decreased by about 1% (assuming inflation was 2%). So you'll need to look at that in their sample plans to ensure they're accounting for all of this correctly. If not, then why are you paying extra for that? Then if they are, how are they guesstimating future inflation rates that indexing is based off of? So if you're thinking you need to spend up for NaviPlan, or a similar vendor that claims to calculate taxes in great detail, then you should review that to see if their code actually performs basic Real World functions like this.

Just getting in the ballpark via average / effective tax rates is sufficient for financial planning, so that's the extent of our tax planning software.

You'll never get sued if it's obvious you're totally guessing what future taxes will be by using something as inaccurate as an average global rate on everything.

Trying to nail down taxes to any degree of accuracy is a waste of resources, because clients of means hire actual accountants for that. All using financial software that makes a resource-sucking fuss over trying to predict taxes decades out is going to do is expose you to more future-predicting liability.

So it's best to focus on financial planning and investment management, and not trying to do the tedious work of an actual underpaid CPA (unless you are one too, of course).

We could have made a resource-sucking fuss over calculating taxes in great detail, like most of our competition does. But we chose not to. Here's why:

First, after making thousands of retirement plans since '88, using just about every retirement planner every made, the bottom-line is there is no significant difference between making an educated guess and using the most detailed tax-calculating software available.

Just the cost of just having the feature of calculating detailed taxes owed in a retirement planner is usually more than the total cost of RWR.

The money to pay the programmer to sit and do this constantly-changing tedious work has to come from somewhere, so it just gets tacked on to the price you pay.

So if this is important to you, then consider buying both the IFP and TurboTax for less money than the retirement software you were considering (because it calculates taxes in detail).

Then you'll have financial software for doing both jobs, for less money.

TurboTax is about $50 and you can get the IFP for $500.

You'd use TurboTax to calculate total taxes due, then you just divide that by gross income, and you'll have the needed bottom-line average tax bracket number.

You won't find just retirement software that will perform half of the needed retirement analysis functions the IFP has for under $600. So buying the IFP and TurboTax for ~$550 is the best you can do today.

No matter how you do the tax math, the critical number (the annual average tax bracket) will be within a percent or two regardless if you just "guess" using the IFP's average tax bracket calculators, use TurboTax, or spend over $3,000 on the most expensive retirement planner.

Then in a few years, rates will change by much more than this percent or two, making it all moot (unless you have our financial plan software, where you can just change future tax rate assumptions to whatever you want them to be in every year).

The bottom-line is everything in the financial world is just a guesstimate. So spending hundreds to thousands more on expensive retirement savings software, compared to ours, makes little-to-no sense, from the tax calculating point of view.

We feel the best thing to do is to calculate the average tax bracket, then just round it up a few percent to be conservative in the guesstimates - so if the result is 17%, use 20%; if it's 22%, just use 25%. This works the best all things considered.

When it comes to calculating taxes in financial planning software, you do not "get what you pay for." You're paying a lot, and getting little-to-nothing of value in return.

The best word to describe this mess is to just be "pragmatic" about it.

The way we chose to deal with this quagmire is the optimal solution. If it wasn't, then we would have added a detailed tax analysis module to everything years ago, just like everyone else.

Things haven't evolved hardly at all in these two worlds, because everything is built around basic financial and legal concepts that rarely change. The only things that really change are tax laws that make the numbers change.

Things like investing, college funding, life insurance needs, and retirement planning have been essentially the same since they first came out.

So estate planning and taxes are 95% about keeping up with constant changes in numbers. We just don't want to be bogged down with having to maintain an expensive employee just for that.

We don't do anything in estate planning because it's the lawyer's world full of trusts and expensive legal problems, uncertainty, confusion, differing opinions, constant updating; and then that market has been saturated since the 80's, and has recently faded away because of record low demand. The whole estate planning industry has basically ended because of the high exemptions in 2013.

Always being plagued with implementing estate planning updates and tax law changes, which happen more than annually, is one of the biggest reasons comprehensive financial planner software is so expensive, cumbersome, and full of bugs.

Basically since the exemptions were raised so high, and since everyone's investment portfolio has been growing so slowly, if at all, the whole estate planning business has pretty much been dried up for years.

For generating reports used in estate planning presentations, Leimberg's Number Cruncher has been the industry leader since the 80's, they have the most accurate numbers, are inexpensive, and their reports print and fit nicely (and integrate well) into financial plans.

If you don't know what's going on with these two parts of the financial planning process (taxes and estate planning), then the Financial Planning eBook helps explains it more - enough so you'll know it may not be worth going there, which is what we recommend (unless you're servicing mostly "ultra-high-net worth clients" - which are $12M or more under management. Even $10M can now be easily handled with a simple AB trust).

Financial Planning Software Modules For Sale
(are listed below)

Financial Planning Software that's Fully-Integrated
(the IFP is the NaviPlan alternative for 1/6th the price)

Goals-Only "Financial Planning Software"
(the MoneyGuidePro alternative for 1% of their price)

Retirement Planning Software Menu: Something for Everyone
(the RWRs, RP, and SRP)

Comprehensive Asset Allocation Software

Model Portfolio Allocations with Historical Returns

Monthly-updated ETF and Mutual Fund Picks

DIY Investment Portfolio Benchmarking Program

Financial Planning Fact Finders for Financial Planners Gathering Data from Clients

Investment Policy Statement Software (IPS)

Life Insurance Calculator (AKA Capital Needs Analysis Software)

Bond Calculators for Duration, Convexity, YTM, Accretion, and Amortization

Investment Software for Comparing the 27 Most Popular Methods of Investing

Rental Real Estate Investing Software

Net Worth Calculator (Balance Sheet Maker) and 75-year Net Worth Projector

College Savings Calculator

Financial Seminar Covering Retirement Planning and Investment Management

Sales Tools for Financial Adviser Marketing

Personal Budget Software and 75-year Cash Flow Projector

TVM Financial Tools and Financial Calculators

Our Unique Financial Services
(are listed below)

We're Fee-only Money Managers: So you can hire us to manage your money, and/or financial advisers can hire us to manage client money, using our Model Portfolios and/or Asset Allocation Systems

Mr. Market Timer's Unique Market-neutral Stock Market Timing Services
(the hedge fund alternative)

Consulting Services: Hire Us to Make Your Financial Plan, Retirement Plan, Benchmarking Report, Whatever

Buy or Sell a Financial Planning Practice

Miscellaneous Pages of Interest
(are listed below)

Primer Tutorial to Learn the Basics of Financial Planning Software

About the Department of Labor's New Fiduciary Rules

Using Asset Allocation to Manage Money

Download Brokerage Data into Spreadsheets

How to Integrate Financial Planning Software Modules to Share Data

CRM and Portfolio Management Software

About Monte Carlo Simulators

About Efficient Frontier Portfolio Optimizers

Calculating Your Investment Risk Tolerance

About Discount Brokers for DIY Money Management

About 401(k) Plan Management

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