Find your flow: How to transform your 1040 tax workflow 

Inefficiencies in your tax workflow may be costing you more than you realize. Not only can these inefficiencies strain your existing staff and cost your practice money, but they may also put you at a competitive disadvantage when it comes to attracting and retaining the top talent you need to drive your firm to greater success.

It is no secret that the tax profession has historically been known for long hours and heavy workloads, especially during the tax season. Thankfully, advancements in technology are making it possible for tax firms and professionals to access the tools needed to revamp their workflow processes and weed out time-wasting and often frustrating inefficiencies.

To help firms find their flow and lighten the strain felt during busy tax season, we created this white paper to provide a roadmap for how tax practices can:

  • Modernize the collection of client documents
  • Automate data entry
  • Improve the review process
  • Enhance the delivery of completed returns

We’ll explore the key items tax preparers should consider as they continue to face an increasingly complex and tech-driven environment.

Modernizing document collection

Requesting and gathering the necessary client documents and data is the first phase of the tax prep process. For most firms, this is the most challenging stage of the workflow process. It is also a primary source of workload compression, as clients are often slow to submit the required information. This challenge can be especially true for firms that haven’t modernized their approach.

Typically, there are three different ways that firms have approached data collection: paper organizers, portals, or a file-sharing service. It is not uncommon for firms to use a combination of all three options, but, unfortunately, each of these methods has its pitfalls.

  1. Paper organizers. Firms usually print out paper organizers and mail them to clients in January. Paper organizers are probably the most significant source of workload compression because clients usually don’t mail them back until they’ve received all their W-2s, 1099s, K-1s, etc. Often, preparers receive the needed information late into tax season, which can cause a host of challenges.
  2. Portals. Instead of printing the organizer, it is converted to a PDF and uploaded to a firm’s portal. The taxpayers must then log into the portal, download the documents, and print them out. They then fill out the questionnaire, scan it along with all their documents, and upload everything to the portal. This approach is compounded by the fact that not everyone has a printer or scanner in their home.
  3. File share. In this setup, firms use a file-sharing service to gather client documents. Similar to portals, using a file-sharing service can present the same inconveniences.

During the Thomson Reuters webcast, “Find your flow: Individual 1040 tax workflow best practices,” Greg Pope, Thomson Reuters Director of Marketing in Tax and Accounting, talked about firms using these approaches and how they might impact client service. He explained, “These are somewhat antiquated processes that have knock-on effects, cause issues like the workload compression, and are not a great experience for the client either. Just because that’s the process that you’ve been using for decades does not mean that it’s the one that you should continue to use.”

The reality is that today’s clients have grown accustomed to the conveniences and accessibility of mobile applications, even when it comes to financial services. They want and expect the same experience from your firm. Therefore, it is essential that firms modernize data collection to not only remain competitive but also to improve workflow. This modernization means leveraging the right client collaboration tools that facilitate data collection and integrate with the tax software to automate 1040 preparation.

Collaboration and communication

Consider, for instance, a tool that enables clients to collaborate, share, and communicate with the firm from anywhere and on any device.

Features to consider include:

  • The ability of clients to use a mobile app to photograph and upload documents as they receive them
  • Automatically retrieving 1099s, 1098s, and W-2s for greater convenience
  • Integrating with the tax software to automate 1040 preparation
  • The ability of clients to view, approve, and store their tax returns within the online tool
  • Access to their tax professional from within the tool so clients can message them directly and ask questions
  • E-signature capabilities so e-file authorizations, engagement letters, and other documents can be signed from anywhere

Properly introducing clients to such a tool can significantly improve the adoption rate. For example, you could mail clients a snail-mail letter in November and send them an email announcing the new tool in December. For higher-value clients, you may even want to follow up those written communications with a personal phone call to see if they have any questions.

“[The adoption rate] may be 40% to 50% in the first year, and then it just continues to go up,” Pope said. “It’ll go up dramatically in the second year and continues to go up in the third and years beyond that. But it does require some prep work. You’ve got to make sure that the client is ready for it and knows that it’s coming.”

Modernizing how a firm collects client data and leveraging the right client collaboration tools saves time. It also sets preparers up for success when preparing tax returns.

Automating data entry

After the source documents and client data are collected, it’s time to prepare the tax return. The return is the heart of the workflow process and is often where firms spend a great deal of their time — much more than they need to — and is especially true for those firms not using the latest technology to drive greater automation.

While a growing number of firms are investing in automation capabilities, there’s undoubtedly room for improvement. When examining the proportion of accounting firm workflows that are currently automated, just 27% had high automation, according to a survey by CPA.com, Bill.com, and Hinge Research Institute. Less than half (46%) had some automation.

Is your firm among those still manually putting together workpapers? Perhaps you’re scanning documents at the end of the process just for document storage or not scanning at all? Maybe you have administrative staff scanning documents, converting them to PDFs, and then manually dragging the thumbnails to create an index?

In any case, the process of manually putting together workpapers:

  • Lacks standardization
  • Is highly inefficient
  • Increases the risk of errors

Firms looking to effectively improve the tax workflow process must first modernize document collection and then automate data entry to save time and drive greater efficiencies.

Finding the right scan-and-populate solution

It is vital to leverage the right technology for your firm, especially a scan-and-populate solution that will help automate data entry. This means implementing a robust solution that utilizes artificial intelligence (AI) and machine learning to improve results.

Why? Traditional optical character recognition (OCR) relies on fixed templates that tell the computer where to look for data. With AI, the solution can create dynamic templates to make non-standard documents OCR compatible — a functionality that is essentially impossible with traditional OCR.

In addition, machine learning can establish rational thresholds for expected values. In other words, the OCR solution will learn to catch its own mistakes before humans need to.

It is important to know that OCR solutions do require some human verification to ensure the data extracted from the documents — the W-2s, 1099s, etc. — is accurate before it is exported into the tax software. While AI and machine learning capabilities certainly improve results, firms that truly want to automate and streamline the preparation phase can also use a verification service whose staff will validate the accuracy of all OCR data.

An organizational tool

1040Scan is a solution from SurePrep, now part of Thomson Reuters, that bookmarks and organizes source documents into a standardized work-paper index that follows the order of the tax return. It integrates with several tax prep solutions, including UltraTax CS.

Furthermore, 1040Scan leverages AI and machine learning capabilities and features patented auto-verification technology (which can accurately auto-verify at least 65% of standard documents). SurePrep also offers firms an optional verification service.

“Firms that really want to automate and streamline the preparation phase, they’re using 1040SCAN and using the verify service. No one in the office is doing any data entry. No one is doing any verification,” Pope said. “When the documents run through the system, they go to the preparer and the preparer’s role is then elevated because they’re actually doing the first level of review. They’re not putting the workpapers together — that happened automatically. They’re not doing the data entry or even the verification. They get it, and probably 80% or more of the data is already in UltraTax.”

Integrating scan-and-populate technology with a robust tax software solution is also essential for optimizing workflow. This means using tax software that streamlines data entry, simplifies the filing of advanced returns, and provides ultimate integration capabilities and flexibility.

Features and functionality to consider include:

  • Reducing duplicate data entry through automatic linking between business entities and personal tax returns
  • Pulling in data from the previous year and using to-do diagnostics to link directly to the input field
  • The ability to email a list of missing data to clients with a click of a button
  • Creating allocation worksheets automatically, making it easier to prepare multi-state returns
  • Displaying all relevant information — including input, forms, prior year input, diagnostics, and more — at once on multiple monitors
  • Integrating with a robust research platform that is powered by AI and machine learning to get targeted search results in less time
  • E-signature and e-filing for a paperless experience

Revamping the review process

Reviewers bill time at the highest rate, making review the most expensive phase of the 1040 income tax process. Unfortunately, it is often overlooked as an opportunity for improvement. It’s time the review process gets a closer look and, in many cases, is modernized.

“The billable rates are so high, especially compared to some of these other tasks and whatnot, but firms don’t think about this,” said Corey Greene, Senior Product Marketing Manager at Thomson Reuters, during the Thomson Reuters webcast. “When they think about, ‘Where can I save my time?’ they think about the data collection process, they think about the return preparation process. We need to think about the review process.”

The review process depends on the phases that happened before it:

  • How does the firm gather documents?
  • How were those documents prepared?
  • Is the firm reviewing paper-based workpapers or PDFs?

Reviewing paper-based workpapers is very difficult and inefficient, but even firms that are reviewing electronic workpapers — PDFs, Microsoft Excel, Word documents, etc. — have essential factors to consider, such as:

  • How the documents are being managed.
  • Whether or not the documents are in a document management system. If they are, is there version control?
  • Can you download the PDF or open and edit it? Is there something that prevents someone else from also editing it at the same time?
  • Are there multiple levels of sign-offs in the document management system? In other words, can the preparer sign off on a work paper, and then a reviewer sign off on the work paper?
  • Are there sign-offs at all in the document management system?

“Clearly, the main downside to either a paper-based process, or even one where you’re reviewing the PDFs and Excel files that are managed in a document management system that was not intended for tax prep, is the lack of standardization,” Pope said during the webcast. “One person in the office might manually bookmark the workpapers in one way, and another person in the office does it another way. So, when the reviewer is going through their review, it adds time because things are not always in the exact same place. So, that lack of standardization really costs firms time … That’s the highest billable time.”

A tool to minimize review time and increase staff leverage

The good news is that several tools are available to help firms facilitate and improve the process. With the right work-paper management system in place, firms can minimize review time and ensure standardization by automatically bookmarking and organizing tax documents. 

Furthermore, the right solution can help increase staff leverage. In other words, partners can review more work from more managers — and managers can review more work from staff. Adopting this high-leverage model will increase a firm’s profitability.

SurePrep SPbinder tax work paper software is a solution that can provide firms a distinct advantage, according to Pope. “We had a customer recently tell us that his review that used to take 20 to 30 minutes per return now takes 5 to 10,” Pope said. “Across 1,000 returns or 1,500 returns, that’s a significant amount of time … That’s the highest billable time, too. So that really should be the focus. The review is the area that you want to really streamline.”

It is also important to keep in mind that leveraging tax software with robust diagnostics and hyperlinks to industry-leading guidance and research can help firms further improve the review process.

Tax return delivery: Still a lot of paper

How is your firm delivering the completed tax return to clients and processing payments?

Many firms continue to use several different options when delivering tax returns. There’s still a lot of paper.

There are many disjointed digital options, whether email, file exchanges, or portals. The problem is that nearly all these methods are time consuming — and nearly all of them are inconvenient for both the firm and its clients.

“I see so many firms out there having to remind the taxpayer then several times over what the next steps are that they need to take at this point in the process,” Greene said. “Think about your own experience and your admin staff’s experience if they’re the ones handling this process. Once you deliver that tax return, that end product to the taxpayer, how often are you getting questions from them about what different things mean or what they owe, what the refund they should be expecting?”

Beyond that, Greene notes that getting clients to complete their final tasks is a challenge. “How often do you have to reach back out to them saying, ‘Hey, have you signed that return yet? When can you get around to signing that return?’ … Think about how many interactions are associated with this delivery stage of the workflow.”

A solution that leads to better delivery

Firms can improve and modernize the client experience by implementing the right 1040 client collaboration software. Leverage a solution that makes it easy to deliver final tax returns, tax payment vouchers, and the firm’s invoice.

Furthermore, it should enable clients to easily render knowledge-based authentication (KBA) e-signatures to sign Form 8879 for e-file authorization, make tax payments, and pay their invoices directly from an iOS or Android app.

As noted earlier, today’s clients have grown accustomed to the conveniences of the Internet and mobile applications. Underscoring this point, 89% of Americans used digital payments in 2022, according to McKinsey’s 2022 Digital Payments Consumer Survey. That’s up from the 82% seen during McKinsey’s 2021 survey and the 78% in 2020. McKinsey defines digital payments to include browser-based or in-app online purchases, in-store checkout using a mobile phone or QR code, and person-to-person (P2P) payments.

Today’s tech-savvy clients expect the same modern experience from their accounting firms. Consider a Bill.com survey of millennial business owners that revealed the following:

  • 56% want their accounting firm to work with cloud-based accounting technologies
  • 33% prefer digital payments
  • 25% use their mobile devices for accounting

Then there’s the question of what the firm and its clients do with the tax information. Helping taxpayers interpret and consume the information is obviously important, as well as mining the data for additional growth opportunities. Therefore, it is important not to overlook the value of customizable data mining tools.

For instance, let the system help you identify clients that fall into specific categories — such as qualified business income (QBI) deduction and cryptocurrency — and are ideal for additional tax planning or advisory services.

A talent management advantage

Weeding out inefficiencies in the firm’s tax workflow process leads to happier clients and improved profitability and can help firms attract and retain talent better.

Talent has long been a concern for the accounting industry, fueled by the downward trend of new accounting graduates and the growing number of Baby Boomers looking to wind down their careers and retire. In fact, a survey of finance and accounting professionals conducted by human-resource consulting firm Robert Half found that 91% said they are concerned about valued employees on their team leaving for new opportunities.

Clearly, the stresses of tax season do not help your efforts to keep your most valued employees happy and productive — and to continue growing your team.

A recent article from Thomson Reuters underscores what’s vital to professionals in the tax and accounting field. For the article entitled “Keeping staff happy: 4 ways firms can attract and retain accounting talent,” Thomson Reuters surveyed more than 100 CPAs. The survey revealed that financial stability, work-life balance, long-term stability, and flexibility are key considerations for workers in this field.

Leveraging tools that help ease the heavy workload of busy tax season means that staff are less stressed and have the time to focus on more fulfilling work. The right tools can also help any firm address these areas, creating better efficiencies so you can put your money to better use elsewhere in the practice. Ways to do this can include making investments that improve the long-term financial health of your firm, compensation for employees, or providing your employees the opportunity for growth at your firm.

“When you think about the talent issue, the talent difficulties that all the firms out there are facing, how could you not look for ways to elevate the role of the preparer and elevate the role of all your staff members, whether that’s elevating someone who typically focuses so much of their time on review work into more of an advisory role, preparer into more of a review role, or your admin staff into more of a preparer role? With a lot of these tools, elevating these staff members is more and more possible and being enabled each and every day,” Greene said.

Opportunities to consider

Throughout this white paper, we discussed challenges facing tax preparers and introduced solutions to consider. Those solutions are designed to help tax professionals avoid inefficient tax workflow processes and the associated costs in time, money, and talent.

Now, we’ll take a deeper dive into those solutions.

SurePrep 1040SCAN

1040SCAN, a scan-and-populate solution, allows you to standardize workpapers, reduce or eliminate data entry, and eliminate OCR verification. It automates four to seven times as many documents as the alternatives and exports data directly to your tax software: UltraTax CS, GoSystem Tax RS, CCH Axcess Tax, or Lacerte.

Firms can scale 1040SCAN according to their needs with three service level options:

  • Organize only
  • Organize with data capture
  • Organize with data capture and OCR verification

Learn more about 1040SCAN.

SurePrep SPbinder

This solution helps you minimize review time, standardize work-paper preparation, and increase staff leverage. SurePrep SPbinder makes it easy to manage digital workpapers — and, in conjunction with SurePrep 1040SCAN, automatically organizes them into a standardized index that follows the flow of the tax return.

Powerful preparation and review tools streamline the process and shorten review time. You can facilitate distributed and remote collaboration with cloud-based binders, change tracking, and multi-level sign-offs.

You can export information directly to your tax software and generate a bookmarked, organized PDF with all notes and annotations for long-term storage. SPbinder also integrates with UltraTax CS, GoSystem Tax RS, CCH Axcess Tax, or Lacerte.

Learn more about SurePrep SPbinder.

UltraTax CS

Automate your entire business or professional tax preparation using the powerful, time-saving tools UltraTaxCS professional tax software includes. This solution allows you to improve your workflow and increase profitability by streamlining data entry, filing advanced returns, and optimizing your business.

You’ll access a full line of federal, state, and local tax programs, including 1040 individual, 1120 corporate, 1065 partnership, 1041 estates and trusts, and multi-state returns. Meet all your tax workflow needs with a customized, end-to-end solution built on cloud computing, advanced data sharing, and paperless processing.

Spend much less time on returns and much more time on your other priorities.

Learn more about UltraTax CS.

GoSystem Tax RS

This professional tax software allows you and your team to complete more income tax returns in less time. Used by the top 100 CPA firms, GoSystem is highly scalable and can handle the workflow regardless of firm size.

The software serves clients filing all return types, including multitiered consolidated corporate returns, life insurance returns — including mixed group filings — and tax equalization returns. It provides unrivaled scalability, multiuser access, ironclad security, comprehensive return processing, import/export capabilities, and quick and easy reviews.

Learn more about GoSystem Tax RS.


Change can be intimidating, but it is necessary in order to compete in today’s environment. Advancements in technology are enabling firms to modernize the collection of client documents, automate data entry, improve the review process, and enhance the delivery of completed returns to their clients.

Make your staff happier, your clients more satisfied, and improve the overall health of your business by turning to a trusted provider. There is no better time to “find your flow.”

Better tax software with UltraTax CS

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