Recently, we sat down with Moneytree client, Steven Clark, CFP®, EA , to learn how the software elevates his tax preparation services and helps differentiate him from other tax professionals in the area. Steven is an IRS enrolled agent*.
Steven has been a client since 2017, when he heard about Moneytree on a Michael Kitces podcast.
Steven originally used Moneytree TOTAL Planning Suite Desktop and recently switched to the online version, Plan, which includes updated features like graphs of remaining yearly capital, account aggregation, new Roth conversion and Qualified Charitable Distribution calculators, withdrawal order customization, and one-page summary report.
Tax planning is a big part of your business, isn’t it?
Yes. I usually meet with clients twice a year to do tax planning. Early in the spring and then later in the year to see where we’re at and see if there are some things we can do to try to minimize taxes and see what’s going on so we don’t have any surprises when we file the tax return.
In comparison to other software you’ve used in the past, what is it about Moneytree that allows you to do your business well?
The tax calculations, for sure. I trust them. I’ve looked at them. I’ve compared that against my tax preparation software and I can pretty much model everything in there. You hit all the areas for entering the information that’s needed for the tax return, like qualified business income deduction. I can put that in. The change tables are huge because I can go in and tailor things with the change tables.
Most financial planning software doesn’t even try to tackle some of the more complicated tax issues. That’s not their specialty. Would you say Moneytree can handle complicated scenarios?
One big thing is you’re calculating the actual taxes for the tax brackets. A lot of software you just enter an effective tax rate. You have to guess what the effective tax rate is, or maybe the marginal tax rate. You guys are calculating the actual taxes and not just saying to enter 20% for the rest of my life, that’s the effective tax rate. I like that. That’s a biggie.
How does Moneytree help you feel confident in the taxes and plans you prepare?
The tracing (the audit trail), that’s a big one that I like. I haven’t seen that anywhere else where I can trace through and see where the data is coming from. I’m a detail-oriented person. When I first started using the software I used that tracing because I have to feel confident in the numbers. I have to know where they’re coming from so that I can sit in front of a client and believe in them. Or if they ask me the question “how are you coming up with that number?” I can show them.
Can you talk about how tax preparation and cashflow work together, and why having the right technology is critical?
We really want to get as close as we can to understanding cashflow through the rest of the year and what the real taxes are going to be for this calendar year, January through December 31. I use the change tables to adjust for expenses already paid year-to-date and try to get as close as I can to however many months are left in the rest of the year. And I model Medicare expenses for Medicare part B and supplement plans. That five-year cashflow page, that first column shows me what the current year is going to look like.
Younger people in their 30s and 40s are more looking at just the long-term projections on assets and wondering what they could look like in 15 or 20 years. Not so concerned about the next 12 months, or 12 months from now. But for those retirees we’re looking at cashflow for the current year.
What would you say to someone considering Moneytree for their business?
Moneytree Plan allows me to accurately model my clients’ financial situations and the future change tables allow me to customize inputs for unique situations.
I prepare tax returns for my financial planning clients and rely on Moneytree for accurate tax projections. The software calculates taxes each year in the plan based on the client’s actual tax brackets; the inflation rate for the tax brackets is customizable. I use the audit trail feature in the reports extensively to trace how the numbers are computed when my clients have questions. Moneytree Plan has become an essential tool for me to provide retirement planning to my clients.
*An enrolled agent (EA) is a federally authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service.
