Tax preparation is a crucial and time-consuming task that individuals and businesses undertake each year. With the ever-increasing complexity of tax laws, preparing taxes can be overwhelming even for experts in the field. And, while this tax season has come to an end, it’s never too early to start preparing for the next. The advent of automated data tools, including consumer-permissioned data, will make tax preparation more manageable and efficient than ever before, and tax preparation software companies should take advantage in order to optimize their processes for the coming tax season. Here’s how they can do it.
Benefits of using automated data collection for tax preparation
Automated consumer data collection refers to the process of automatically gathering and analyzing consumer data from various sources. The process is often facilitated by specialized tools or consumer-permissioned data platforms, like MeasureOne, that are designed to collect data from consumer data sources or online accounts.
Within the context of tax preparation, automated consumer data collection is typically associated with the use of tools that instantly collect necessary income, employment, and brokerage data from banks, credit card companies, financial institutions, and other relevant sources. The data is then analyzed to identify potential deductions, expenses, and credits that can be applied to a consumer’s tax return.
Employing tools to automatically collect consumer data can greatly simplify the tax preparation process for businesses and consumers alike by:
- Increasing accuracy and reducing the risk of human error, ensuring that tax returns are accurate and compliant with tax laws.
- Saving time by eliminating the need for manual data entry and analysis, saving time and allowing tax preparers to focus on more strategic tasks.
- Reducing workload (and stress) by improving the quality of the data.
- Improving compliance by staying up to date with tax laws and regulations, reducing the risk of audits or penalties.
What is consumer-permissioned data and how can it be used for tax preparation?
Consumer-permissioned data (CPD) is data authorized by a consumer that comes directly from an online account. Also known as credentialed data, this type of data is the most up-to-date and accurate type of consumer data that businesses and individuals can receive because it comes from a primary source, such as a client’s online brokerage account or payroll account. Platforms, like MeasureOne, enable businesses to collect and use consumer data instantly via API, delivering the requested and permissioned information instantly from the account.
How does automated data collection with CPD work for tax preparation services?
In tax preparation, consumer-permissioned data can be used to streamline the process of collecting and analyzing financial information including W2s, 1099s, and other required forms for tax returns. With the consumer's permission, automated data tools can access and provide their financial data to help preparation services identify deductions, expenses, and credits. The process reduces the time and effort required for tax preparation while also increasing the accuracy of the final tax return.
For tax preparation services, using a consumer-permissioned data platform looks like this:
- A tax preparing service requests the income and/or brokerage information from a client to start work on their 2023 tax return.
- During the process of preparing their tax return, the client connects their payroll and/or brokerage accounts to instantly share the required data/documentation
2a. In the case that they cannot log into their online account, the client can upload their documentation directly within the existing flow.
- The tax prep software automatically incorporates the real-time income, brokerage, payroll data.
At MeasureOne, these three steps are all it takes to get the client data you need to begin successfully preparing their taxes.
Looking forward to 2024’s tax season with MeasureOne’s tax preparation solution
Look into the future of tax preparation with MeasureOne’s instant income and brokerage data collection. Taking advantage of automation tools isn’t complicated when you have a partner in MeasureOne. We simplify data collection with a variety of solutions and integration options, saving tax prep software businesses time, money, and resources.
MeasureOne offers the following integration options for businesses to request and access consumer-permissioned data:
- Hosted web portal: With no development needed, MeasureOne provides hosted web experiences to access and share consumer-permissioned data
- API: Integrate the consumer experience natively into your own platform if applicable. Results will automatically populate in that platform
Discover how MeasureOne can support your business with consumer-permissioned data.