Optical Character Recognition (OCR)

Optical Character Recognition (OCR) is software technology that reads letters, numbers, and various other symbols on electronic documents and converts them into data. In the context of 1040 tax return preparation, OCR enables scan-and-populate solutions to recognize standard source documents, read the data within their fields, and export the data to your tax software.

OCR technology isn’t perfect, but its accuracy and capabilities are constantly improving. With the passage of each tax season, the list of recognized documents grows—and SurePrep is leading that push. 1040SCAN has the most robust OCR in the tax and accounting industry, which empowers firms to maximize automation.

1040SCAN recognizes 4–7x as many tax documents as competing scan-and-populate solutions. It’s the only software that can OCR data from Federal Organizer Pages, Grantor Letters, and State K-1s. 1040SCAN also recognizes minor fields within documents such as Margin Interest, Investment Fees, and Foreign Income. By maximizing the of amount of OCR’d documents and fields, 1040SCAN eliminates an unprecedented quantity of data entry for preparers.

See the full list of documents recognized by 1040SCAN→

OCR technology is highly accurate, but it’s not perfect. The possibility of a scan-and-populate solution misreading a character always exists, which is why it’s an established best practice for a person to verify document data before it’s exported to the tax software. While verification is far less time-consuming than manual data entry, it still takes time. 1040SCAN’s OCR offers a unique feature to help lighten the load.

1040SCAN has a patented auto-verification technology that guarantees 100% accuracy for native PDFs. Native PDFs are in their original format and have never been scanned from paper, for example, a 1099 downloaded directly from a brokerage account. 1040SCAN reads the embedded text layer in the native PDF and compares it to the data read by OCR to make sure it matches. As taxpayers deliver an increasing number of digital documents, both by manual processes and automated document retrieval, 1040SCAN’s patented auto-verification feature will become even more advantageous in the modern era of 1040 tax return processing.

1040SCAN is available in 3 versions.

1040SCAN ORGANIZE: Automatically bookmarks and organizes source documents into a standardized workpaper index. No data within the documents in extracted or exported to tax software.

1040SCAN PRO: Automatically bookmarks, organizes, and exports source document data to your tax software. Native PDFs are auto-verified and the remainder of OCR’d data is verified for accuracy by someone in your office. The verified data is then exported directly to your tax software.

1040SCANverify: A combination of software and service with the same scan-and-populate capability as 1040SCAN PRO. Instead of someone in your office verifying OCR’d data for accuracy, SurePrep staff handles the verification. As with PRO, the verified data is then exported directly to your tax software.

To make sure your firm is getting the most out of 1040SCAN’s OCR, we recommend scanning documents in black and white at 300 DPI. We also recommend the following scanners:

  • Canon DR-M260
  • Canon DR-C240
  • Fujitsu fi-7160
  • Fujitsu fi-7260
  • Fujitsu fi-800R
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