Tax software can be categorized into three types: tax tracking, tax planning, and investment tracking. Tax tracking software helps track expenses and categorize spending, while tax planning software helps create long-term budgets and investment plans. Investment tracking software allows users to monitor real-time performance and set rules for buying and selling investments.
There are many types of tax software programs, some of which are dedicated to specific financial planning and measurement tasks. A common category is tax tracking software that seeks to track money earned and spent, categorize that information, and extrapolate behavior patterns. Another common category is tax planning software that is generally aimed at planning short-term budgets and long-term investments, as well as setting retirement goals. A final common type of financial software involves investment tracking and implementation. This type of software often allows the user to monitor the real-time performance of their investment vehicles and set rules for buying new investments and selling them automatically.
Some tax programs are designed with the goal of tracking expenses. Purchases can be automatically or manually entered into the software so that the user of the software can easily budget expenses by purchase category. This type of software often aims to keep the user informed about exactly where their money is going so that they can make informed adjustments to spending habits. Some tax software of this type helps the user keep track of information, such as credit card and loan interest rates, and helps keep the user aware of unexpected changes in interest or rates. purchases that might otherwise go unnoticed. Often, this type of tax software can be configured to send email or text alerts when budgets are exceeded or unexpected purchases are cleared, offering a centralized place to manage alerts rather than through a myriad of banking establishments.
Tax planning software often helps the user create long-term budgets and general plans for investments and retirements. Sometimes this functionality is incorporated with the tax tracking software, but other times it is packaged in a separate program. This type of functionality is not focused on tracking purchases, but instead focuses on organizing financial resources for long-term goals. General goals that this type of software can be used to accomplish include retirement planning, funding a college savings account, or figuring out how to pay off debt.
Another category of tax software is specifically designed to handle investment and existing investments. Often this software is maintained by an online investment company to facilitate the use of their service. This type of software can allow the user to see the full value of their investments until recently and easily see fluctuating values. Some trading software also allows the user to set automatic buy or sell points for trading instruments, potentially allowing for complicated automated trading strategies.
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