Avoid H&R Block

Most people’s tax returns are ridiculously easy. If you have wages, interest or unemployment benefits, and perhaps have some Earned Income Credit coming, go to the IRS site that directs you to place where you can do your taxes for free. Don’t be scared – it’s routine, fail-safe, and accurate.

Whatever you do, avoid H&R Block.

If your taxes are more complicated, you are self-employed, itemize deductions, have doubts about whether or not you are entitled to exemptions, buy a tax program. TurboTax will get you through it. They will rip you off to piggy-back a state return, which is a big profit center for them, and maybe even charge to e-file, which costs them virtually nothing. But you are still better off than you would be visiting an expensive preparer.

Whatever you do, avoid H&R Block.

If you have tax issues beyond the norm – sale of assets or residences, passive investments, minimum IRA withdrawals, audits, rental units, LLC’s and S-Corps and K-1′s, then it would not hurt to visit either a CPA or an enrolled agent. Avoid the shingle-hangers, tax preparers who are neither of those, as they are usually strictly reliant on the software and often turn out shoddy work. CPA’s and enrolled agents must undergo rigorous training. It’s not easy to become either. Do ask your preparer how he/she bills, as many of them, like auto mechanics, work off a schedule and charge $X for this form, $X for that form, without regard to actual time. Those who charge by actual time are usually more reasonably priced.

Whatever you do, avoid H&R Block.

It’s probably wise to avoid the big firms, the well-established CPA’s in town, and I mean them no disrespect. Quite the opposite – usually these are people who deal in complicated issues, audits and court cases. Using them for a fairly normal return is a waste of your money and their resources. They are there to serve a different clientele.

Now, H&R Block: They will do a good job for you on all of the above except very complicated returns. However, they are wildly over-priced. The bulk of the work in tax preparation these days is done by the software firms who prepare the programs that we tax preparers use. Consequently, H&R Block will do a ridiculously simple return and charge an outrageous fee. Where they invest at best 15 minutes of time, they will charge $150-300. They get away with this nonsense because people are intimidated by taxes and think there is some special magic behind the curtain.

And they have another angle: All of their employees have to push, and push hard to sell you a tax refund loan. These days e-filed refunds arrive in your bank account within 7-10 days, but Block will push to advance you the refund nonetheless. There is not enough time involved for real interest to be earned, but they will nail you with fees. It has become a major profit center for them.

H&R Block is running adds on the radio now, probably TV as well, urging people who file 1040EZ’s to come in and have them done for “free.” At the very end of the ad, the fast talker says “extra fees for state returns and earned income credit.” That’s almost everyone who files a 1040EZ! (But take a place like Wyoming, that has no income tax, and I’m betting that ad is not running there.) It’s bait and switch.

It’s reprehensible, and sleazy. Whatever you do, avoid H&R Block.

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