Danny Novo
How’s that for an inflamatory title. But you know what, I’m pretty pissed.
Executive Summary: We have gone to H&R Block each of the last two years, and each time the “Tax Advisors” there have screwed up our taxes, such that I have had to come home and do basic research on the Internet, take that research back to H&R Block, and have my tax forms amended or changed. For the privilege of fixing my taxes for them, I have paid them several hundreds of dollars. We will pick a CPA blindly from the phonebook before we go back to H&R Block.
On to the admittedly long and ranting post:
Last year, we went to H&R Block to do our taxes. Yes, I know. Please refrain from comments like, “Well duh, you went to H&R Block, what do you expect!”
The Tax Advisor who helped us was deemed by the people at the office there as the “expert” and the best they had. We were even interrupted once or twice by other Tax Advisors so that he could answer their questions. But when confronted by my wife’s stipend (she’s a Post-Doc) he was flummoxed, and counted it as regular wages. I went home, having paid H&R Block their exorbitant, per-form fees, and chatted with one of my wife’s co-workers, and he said it should have been done a different way. I researched on the Internet, and armed with this information, I went back the next day. I was helped by a different Tax Advisor, who seemed surprised that our first guy had screwed up, and we filed an amended return. As a result we owed $4,919.00 (!) less in taxes last year.
We were pretty upset by this turn of events, especially given how much we paid H&R Block for their services. And we swore to never go back.
This Year
With all the interviewing and traveling and moving and whatnot, we only just now started to think about taxes, and I decided to go back to H&R Block. After all, nothing had really changed in our taxes, so what could there be that would be so complicated? I went armed with our taxes from last year (both original and amended).
It took this year’s tax monkey two hours, with me sitting there the whole time, to figure out our taxes. Let me tell you what they do at H&R Block. You come in at your appointed time. They sit you down with your “Tax Advisor” who fires up a computer with specialized H&R Block software on it. She takes your personal information, then starts asking questions. The computer prompts her with these questions. She fills in boxes on the screen with the numbers you present to her. Sometimes she deviates from script, because she has done this a lot, and knows that you need this document, or you probably had this deduction. But for the most part, she follows the prompts. At the end, the software checks for errors, and she has to actually solve a few problems: this box wasn’t filled in, this form isn’t really required, etc. Seems easy.
We bought a Toyota Prius last year, and get a tax break of some sort for doing that. I expected a box to pop up after something like “Do you have farm income” that might read “Did you buy a hybrid car last year?” But no. I had to bring it up. Fine. When I did, our Tax Advisor monkey had never heard of any sort of tax break for that. She suggested that maybe we just got the warm glow of a planet saved, or something. I insisted. So she looked through her computer and her book and came up with a “Qualified Electric Vehicle Credit” (IRS Form 8834). This must be it, she said, so we filled it out.
Taxes done, I signed over my fees (almost twice as much as last year!) and left with forms to be signed by my wife.
At home, not comfortable with what she had done, I did five minutes of research on the Internet, and came up with this, and this, and this.
Which means she deducted $2,400 from our taxes as a tax credit, when instead it should have been a $2,000 deduction from our taxable income on line 36 of the 1040. Which, I think, means that we will go from getting a decent refund to owing a ton of money.
My beef with H&R Block
Of course I am not happy that I am paying the government more tax. But that isn’t H&R Block’s problem. My problem with H&R Block is that I take my taxes to them because I do not understand some of the intricacies of our investments and whatnot. I take it to them because they are supposed to be the experts. I want the peace of mind that comes from having someone else sign the document and affirm that everything in there is correct.
But twice now, I have had to correct H&R Block. I have had to tell them that they completed my taxes incorrectly. I have had to make them fix my taxes. And as a reward for catching their mistakes, I have had to pay them upwards of $600 dollars.
This is the essence of bad business. I know their business model is built around filling out 1040 forms for people with uncomplicated taxes. But really.
Update after talking to the manager
We’re going back in tonight to fix it, and getting half of our preparation fee back. We’ll see how it goes.
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Last year my wife and I took our taxes to a tax attorney who also happens to work on my father’s taxes. The reasoning? He’s the guy who’ll probably handle my dad’s estate, so I wanted him to be familiar with my financial situation as well. You may want to look into a situation like this once you get settled. It’s good to have a lawyer (he also put together our Wills and a trust for our daughter). It’s going to cost you more than H&R Block, probably, at least in terms of money. What you’ll waste less of is time, because a good tax attorney is going to be up to date on all tax law changes and know exactly what goes where, when, and why. I think it’s worth it (we don’t have a lot of money, but I made this a priority).
Yeah, I know that. We had a CPA in Iowa, who did our taxes, cheaply and well (well enough to not get audited at least). We’d like to get back to that (and find a good family attorney, too) but you nailed it: we’ve been waiting to settle down permanently. Hopefully this next move will be it.
I recommend TurboTax.
On another note, why didn’t I ever think of a category called “Rants?” So obvious.…
Danny — I use TurboTax. Last 5 years. It has the memory of my past tax returns, I just fill out my W2s and investment statements, keep a folder of my charitable donations and work expenses, and it’s pretty straightforward. They ask the same questions as HR Block, althought it sounds like they do a better job :)
I used tax software (the Mac equivalent from Quicken) but our taxes have grown too complex for me to be sure of what I am doing. Hence my seeking of professional assistance.
I guess I just need more professional professonal assistance.
I worked for Jackson-Hewitt in Ohio and now for the past two years for Liberty Tax Service in Wisconsin. Along with H&R, these are the big three of the tax prep business. What I saw, comments I heard, and now reading your posting all have spurred me to start my own little tax practice out of my home (for the first year anyway). I will be attending three different classes this summer to beef up my knowledge of corp., partnership and estate taxes and have started equipping my office with the most current technology tools. I am not out to make money as much as I want to know that I am affiliated with a competent organization—my own! After 9 years of tax work, including teaching classes, at least I am smart enough to realize when I am in over my head, and refer the person on to someone else. My satisfaction comes from doing the job right and taking away that stress from my clients. However, I do have overhead so the cost will still be around the national average fee of $147. My hourly rate will be $87 (national average $99-$175) and the average time per return ranges from 2 to 3.8 hours (based on last year’s CPA stats).
H & R Block offers a Maximun Refund Guarantee, Their tax advisors are supposed to point this out to you at the conclusion of the tax return. They are supposed to refund ALL of your fees if they make an error that results in an incorrect tax.
In Blocks defense, they have given their advisors a lot of new research tools which should avoid this kind of poor experience. You can ask for a senior tax advisor when you use Block.
When choosing a CPA, take care that the individual is experienced and up to date on current tax rules. Taxes are not most CPAs primary skill. Large CPA firms usually use Back Room Employees to prpare returns. The CPA actually only looks at and signs the return.
I am a CPA and see many new clients each year because H&R block screwed up. I have a 5 year Bachelor’s degree and had to go through intensive testing to earn my CPA. The H&R block employees get a one time quicky course. Taxes are most people’s 2nd biggest expense so paying the extra money is worthwhile. Trust me…
Anyone who thinks a CPA or Attorney is a better preparer is seriously mistaken. Most CPAs and Attorneys farm out there returns. It is very difficult for them to keep up with tax laws as previously said it is NOT there core business.
There is a third and very competent choice; Enrolled Agents who have been around since 1865 would be that choice. The IRS has them take a two day — four part exam all on taxes (corporate, partnership, estate etc..), yet they are cheaper than the CPAs, attorney and the three big tax preparers, H and R Block, Jackson Hewitt and Liberty Tax. If you want to find an EA near where you reside they do have a web site (http://www.naea.org).
I must add of the three, H and R Block is the more professional.