Nine tax-saving apps for advisers

Put down your box of receipts and check out these tools

Feb 18, 2015 @ 2:05 pm

By Darla Mercado

+ Zoom

Everyone can use a shortcut when doing taxes, and a few apps are grabbing advisers' attention as they find ways to save time and a few bucks on – or before – April 15.

One of the first was the Internal Revenue Service's IRS2Go, available on iPhone and Android since 2011. It lets people track the status of their tax refund.

But a variety of other tax-related apps have come out since then. The latest is HSA Coach, which launched Feb. 14. Developed by Aaron Benway and Denise Halter, the former finance chief and controller, respectively, at HelloWallet, this free app gives users a way to track their health care receipts throughout the year.

With this app, clients can avoid hauling around a shoebox of receipts when it's time to reimburse themselves through their health savings account or submit the receipts to get a qualified medical deduction. HSA Coach also tracks the amount of annual distributions from the HSA.

The app makes sense when employers are reevaluating their health care arrangements and nudging workers toward an HSA with a high-deductible plan.

“Something will happen to [most] people in the next five years,” Mr. Benway said. “Say you change jobs or your employer changes carriers. As a user, you lose all your data, and there's no business model to capture that information if they change from carrier A to carrier B.”

Users can also store health-related documents by using the camera function on their phones.

Another app that's gained fans among advisers is MileIQ, which tracks mileage for those who travel and hope to use that data for necessary business deductions.

Leonard C. Wright, a CPA and personal financial specialist in San Diego, says he got hooked on MileIQ after having to keep log books of his travel. Though he has tried other apps, they didn't fare as well. For instance, sometimes they would hit a dead zone and stop logging travel.

MileIQ remotely stores client data and can divide travel into either business or personal mileage. And if you accidentally delete the app from your phone, you can still access your travel records online.

Though the app is free, the service Mr. Wright uses costs $60 a year.

“There are units you can put in your car, but those are really expensive,” he said. “And I don't want to spend $500 to $600 to have a tracking device installed in the car.”

Another expense-tracking app worth considering is Expensify. It's a favorite of Kelley C. Long, a CPA, personal financial specialist and resident financial planner at Financial Finesse Inc.

Expensify tracks mileage and enables people to submit expense reports, so it's useful for business owners as well as employees. If you're using the app for mileage, you can put in the distance, or use the odometer or GPS.

Ms. Long appreciates that it also records time for invoicing, especially helpful if you're a professional who charges by the hour.

“You're at a meeting and you want to track the time without having to write it on a piece of paper,” she said.

Separately, she likes Mint's app, which she uses personally to split out tax-deductible expenses into their own category.

“I have one special category called 'tax items,' ” she said. “I know I'm not missing out on expenses like property taxes and charitable contributions, and I want to make sure I put them on my return.”

Finally, for those who like having a tax cheat sheet readily available, Mr. Wright recommends the Bloomberg BNA Quick Tax app. It has rates and schedules dating back to 2011 and has just been updated for 2015.

“It's neat because it will allow you to get a quick estimate in terms of potential tax liability,” he said. It's especially helpful in the middle of the year, when clients want to get an idea of what their tax situation looks like and need to plan.

“When people go to their CPA in January or February, the [tax year] has already happened, so there is little you can do,” said Mr. Wright, who uses the app in conjunction with financial planning. “I do this before the year ends, so we know to make adjustments.”

For advisers looking to manage clients' tax-savings throughout the year, Bill Winterberg, certified financial planner and technology writer in Atlanta, pointed to three apps:

Total Rebalance Expert,

Tamarac's rebalancing app and

iRebal from TD Ameritrade.

TD Ameritrade offers two versions: One is free for advisers who use the firm for custody, while the other is a standalone product available for purchase. Both TRX and Tamarac are standalone products and work with any custodian.

With data security in the headlines, independent contractors — both clients and advisers — can turn to WageFiling.com as a way to safely file Form 1099 with the IRS, noted Mr. Winterberg.

“It automatically blocks out and redacts Social Security numbers,” he said, noting that the service leaves in the last four digits of the taxpayer ID number, which “isn't ideal, but the IRS allows it and allows you to send forms with the last four digits to a vendor or contractor.”

Mr. Winterberg uses an online vault to share documents with his CPA, ensuring the safe transfer and viewing of tax information.

“Never, ever, ever email tax information to anyone,” he warned, recalling a time he once received a 1099 via email. “You don't know where that email will go or if it gets intercepted.”

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