There are two sides to tax planning for clients. One is understanding their current tax situation, e.g., their income sources, the types of assets and liabilities they hold, the deductions or credits that they might be eligible for, and other taxpayer-specific nuances like the structure of businesses that they own or the types of stock option grants that they've received. Much of this information can be found on clients' most recently filed tax returns, and while being backward-looking by definition – since they're only accurate as of the end of the year prior to when they're filed – the client's tax considerations in the recent past can at least offer a starting point for conversations about what's most likely to also be relevant in the future.
The second piece of tax planning is forward-looking: Taking the client's current tax situation and projecting it into future years to evaluate and compare different planning strategies. These projections can be either short-term and specific (e.g., creating projections for the current tax year and for at most 2-3 years out to give advice on specific strategies to reduce tax in the near term) or long-term and more generalized (e.g., projecting out a client's future tax rate in retirement to decide whether or not it's worth it to do a Roth conversion this year). But in either case, in order to do a forward-looking projection it's usually necessary to have some kind of tax planning software that can project the clients' current tax situation forward and simulate different strategies while applying the correct tax rules for the present and reasonable assumptions for the rules in the future. This is especially true as tax laws such as the Tax Cut & Jobs Act, SECURE and SECURE 2.0 Acts, and most recently the One Big Beautiful Bill Act have introduced ever more complexity into the tax code, which in turn has made it much harder to create any kind of reliable tax projection without software that can correctly account for all the moving parts involved.
The tricky part is marrying these two sides of the tax planning equation – understanding the current situation and projecting future scenarios – together into a coherent whole. You need a way to (efficiently and comprehensively) capture the relevant data from the client's current tax situation, and you need a calculation engine to project those details forward, model changes, and show the results. For a long time, Holistiplan has dominated the market for technology serving these functions. By scanning the client's most recent tax return and extracting the relevant numbers, Holistiplan (and more recently competitors like FP Alpha) can create a picture of the client's current tax situation. That current picture then serves as the baseline for future projections, which the advisor can adjust to model different planning scenarios.
The approaches of Holistiplan and FP Alpha have proven popular among advisors, but they aren't without limitations. First, their functionality relies on the advisor uploading their clients' tax returns, which requires the client to actually give the advisor a PDF of their return (and remove any password protection that their tax preparer might have embedded into the document) and for the advisor to then upload it. This may or may not be a significant blocking point, but for clients who are less organized, have only paper copies of their return, or who have stringent security settings on the return files they do have, the return upload requirement can cause some meaningful snags in the process.
The other issue is that software like Holistiplan uses only the single most recent tax return as the input, when the reality is that multiple years' worth of returns are needed to construct an accurate picture of the client's current tax situation – many advisors ask for up to three prior years' worth of returns from their clients to gain the context necessary to understand, e.g., whether the client has inconsistent or smoothly rising income. Which again isn't something that would necessarily dissuade people from using tools like Holistiplan… but it does create an opening where if a competing product did offer more capabilities to incorporate multiple returns into planning assumptions, advisors might find to be at least worth considering as an alternative.
In this context, it's notable that TaxStatus, the tax portal that allows advisors to access client tax information directly from the IRS, has recently released a new Tax Return History report which shows a line-by-line comparison of up to four years' worth of a client's tax returns. The new report is something of a companion to TaxStatus's existing Financial Baseline Report, which provides a high-level breakdown of just the client's most recent return.
When TaxStatus first introduced the Financial Baseline Report, the big question at the time was whether it was planning to ultimately build a Holistiplan competitor. While TaxStatus had originally served primarily as just a data layer between the IRS and other software, the Financial Baseline Report represented a step towards building out planning capabilities within TaxStatus itself. And because TaxStatus had direct connections to the IRS's systems and the capability for clients to provide one-click approval for the advisor to access their tax data, it was in a position to deliver Holistiplan-like planning functions fed directly by IRS data, without the need to upload an actual client tax return.
But the thing that TaxStatus notably lacks in comparison to Holistiplan and FP Alpha is the forward-looking planning component. While its tools can help advisors assess clients' current and historical tax situations, it hasn't (yet) built anything to project those numbers forward or make planning adjustments. And in rolling out more features like the Tax Return History report, TaxStatus continues to focus more on historical tax data than proactive tax planning, which calls into question whether TaxStatus sees itself as a potential Holistiplan competitor at all (i.e., a tool for evaluating both a client's current tax situation and their future planning), or if it intends to remain firmly on the past/current side of the timeline.
On the one hand, TaxStatus's current offerings highlight the fact that there are a lot of potential uses for "just" the client's past and current tax data in financial planning, from understanding the client's income volatility or charitable giving habits to assessing their propensity to sell assets during a market downturn (e.g., if they have a large amount of capital losses in a year in which the markets declined and have a high allocation to cash today) to gaining visibility into any held-away assets – and so it's possible that TaxStatus doesn't need to directly compete with Holistiplan at all to have value in its own right.
But on the other hand, it's hard to ignore how much the respective capabilities of TaxStatus and Holistiplan seem to complement each other: TaxStatus with its ability to pull in tax data from the IRS without uploading documents and to assess multiple years' worth of returns at once; and Holistiplan with its ability to project the current numbers forward and build scenarios out of them. One could see one of those providers starting to build the other's capabilities into its own tools or vice versa, and thereby providing competitive pressure as the more "comprehensive" tax planning platform. Or alternatively, it's reasonable to imagine one of those providers simply buying the other and combining their capabilities together into a single front-to-back, IRS-connected tax tool.
The key point is that it's rare for planning tools – even ones that specialize in a single planning area like tax, estate, or retirement planning – to hone in on only one part of the planning process. If a tool is capable of doing end-to-end planning, then it will typically try to do that, rather than require advisors to buy more technology to complete the process. And so when one provider specializes in the backwards-looking data coming straight from the IRS, and other providers specialize in the future planning that that data feeds into, it's only natural to wonder when they'll start to converge towards each other (or merge together entirely).
This article first appeared on the Nerd’s Eye View at Kitces.com at https://kitc.es/advisortech-feb2026, and has been reprinted here with permission.
Ben Henry-Moreland
Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful.
Michael Kitces
Michael Kitces is Head of Planning Strategy at Focus Partners Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Focus Partners Advisor Solutions, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.
In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.
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