Take Precautions When Using H&R Block’s “People”

As almost all of you may know, H&R Block is the largest tax preparation chain in the country.  If you have ever seen any of their recent commercials, you undoubtedly know that it likes to mention it’s “people” in it’s numerous ad campaigns.  You may also be aware that the company offers a tax preparation course (albeit a brief one compared to the ones that formally educated prepares must go through), and some of you may even know that it hires some of the better performing “graduates” to work at the company’s many franchise stores upon completion of the course. However, you should be warned that these “people” may not be very qualified to prepare many tax returns.  In fact, many of the “people” may have never even seen a tax return in their lives before they took the H&R Block tax preparation course.

 

Now, I have nothing against the people who take the course to benefit themselves and who are interested in getting a basic understanding of the tax system, however, unless you have a simple tax return which includes a basic 1040, the standard deduction and some interest you can be taking a large risk by allowing them to prepare your tax return.  In fact, the basic course is only 69 hours long, which is the equivalent of approzimately a single semester’s worth of time in one college level course.

 

 

Further, I have come across ads placed on CareerBuilder.com and other sites that H&R Block placed for tax preparers which state that it is looking for people who are interested in earning additional seasonal income to employ during the tax season, including students, retirees, and stay-at-home mothers.  I have personally been brought many returns that were prepared by H&R Block that contained over-sights, as well as errors that would have been caught by peoperly educated, experienced professionals.  Of course, even CPA’s do make mistakes, but the chances are far greater that an inexperienced person will file an incomplete or erroneous tax return.

 

As an example, the document below was taken from a client who went to H&R Block for a few years to prepare her taxes.  Just to make it clean, she is in her late 50’s and had filed every year for decades. The reason that is so important to point out is that the person who prepared her taxes in 2007, the first year with them, failed to obtain her prior-year 1040 which is why the 2006 column is all zeros.  Why is this important?  Because she had significant long-term capital loss carryovers from prior years. This egregious oversight cost her an offset to her income of $3,000 in both 2007 and 2008, plus the costs of preparing the amended tax returns (I had to get paid for my work after all!).

 

 

Frankly, I am not saying that the people who are employed by H&R Block are incompetent, but that you may want to ask for qualifications and experience histories of any person you bring your tax return to.  This is perhaps the most important document that you will need to prepare each year, so wouldn’t it make you rest easier knowing that a properly educated and trained professional is entrusted with it?

 

Have you ever had an experience like this with one of these tax preparation chains?  What made you go there to begin with?  Did you assume it would be cheaper than a real tax accountant or CPA?  Maybe you were pressed for time and they offered quick service?  Whatever the reason, I would love to hear your experiences both good and bad!

  • http://www.facebook.com/profile.php?id=100002637635109 Frugal Toad

    Capital loss carryover is a fairly common tax item for individuals with taxable investment accounts.  That is hard to believe that someone in the tax prep business would not ask the client about investment losses.  Goes to show that the consumer needs to educate themselves about using services like tax prep firms.

    • http://www.dollarversity.com Eric J. Nisall

      Well, the proof it on the paper, that’s for sure! That’s why I hate places like this. They think it’s perfectly fine to send marginally trained, inexperienced people off to prepare taxes for other people like this.

  • http://www.carefulcents.com/ Carrie Smith

    I worked for H&R Block for 4 years, and I agree with some of your points. The classes however, have been changed and they require more hours and you have to take it for two years. Until then the tax returns you do are limited since you don’t have the advanced experience. 

    For me, being an overachiever, I took their advanced summer classes as well, and became specialized in other areas. So I was one of the few 2nd year tax pros that was able to do SCH C and SCH F returns. My first year I mostly did 1040EZ and 1040A.

    I think all tax pros and CPA should be accepted with caution, since I have found VERY big errors on returns that CPA’s have done. In general H&R Block takes tax prep very seriously, and they will go out of their way to correct mistakes made. At least the franchise I worked for did, I don’t know about corporate offices or other franchises.

    Good post, though. Everyone should be aware of who handles their taxes, and to review the information for themselves in case of mistakes.

    • Eric J. Nisall

      I can cerainly appreciate the fist hand knowledge Carrie. I don’t know what kind of branch did this return (franchisee or corporate) but for the return to go out without anyone noticing that there was no prior year info was absurd.

      You are 100% right that all preparers need to be vetted before using them. Everyone is human after all, and people do make mistakes.

  • Jeff | Sustainable life blog

    Wow – I didnt know that these people were total hacks!  I usually self file because I just take the std deduction and be done with it, but this makes me feel like I was getting ripped off if I was using H&R block

    • http://www.dollarversity.com Eric J. Nisall

      It’s not all of them, Jeff. This just happens to be a huge example of errors that I have found. All preparers of all levels of experience make errors, but for a company that is as large as H&R Block, I would have expected that someone would have noticed and then questioned why there was no record of anything from 2006 on this particular tax return. To me, that is an unacceptable oversight, especially when you consider how high some of the figures are–they don’t go from 0 to those levels overnight!

  • http://dqydj.net/ PKamp3

    I tend to look at places like H&R Block like I do places like Midas.  Fine for an oil change in a cheaper car, but I don’t want them to replace the transmission!

    I think you nailed it with the 1040EZ comparison.  The fact is, most of the people who read this will have something more complex – so we should think hard before we decide how to file our returns.  think they can handle

    • http://www.dollarversity.com Eric J. Nisall

      I really never considered them a real option. Even though, there a re probably some really talented people in the organization, between the hiring of inexperienced preparers and the refund anticipation loan scandal I have had a bad feeling about them.

  • http://onecentatatime.com Onecentatatime

    I must say this is not eye opener. I have seen people using them. Actually their aim is to give you more return than you could get somewhere else. By doing so they exaggerate few things..

  • http://mybrokencoin.com Aloysa

    This ia great post! I was going to use them once but then I had my doubts and cancelled the appointment. Now, I am really glad I didn’t go. I would use a CPA if I have a need. I usally do taxes myself.

    • http://www.dollarversity.com Eric J. Nisall

      I would still recommend checking out anyone you are going to pay, even a CPA. I have seen some of them make some errors just like anyone else. It’s always better to be safer than sorry, and just because they have some fancy lettering after the name, doesn’t guarantee that they will be a good fit for you.

  • Gabrielle Schlotz

    I filed joint with my husband but he mad so much this year that we owed. We are currently separated and I was told to file single and I am I cancel that and go file on my own?

  • D92506

    I am taking the H&R Block class beginning this week.  I have used an EA for the last almost 30 years.  The first 2 I met through H&R Block and was very pleased with them.  We had a business and did fine.  When I divorced, did my own taxes using Intuit.  Bought a house with a rental in the back and decided it was time to use a professional – an EA.  She died about 4 years ago, or so.  Based on a recommendation  I used a local CPA and was taken to the cleaners!  2 years in a row!  Well, based on the 2nd year being as bad as the first and my not knowing much about taxes (I had previously trusted the professionals) I sensed there was a problem.  Submitted our taxes to 2 different people – an EA and CPA – both stated the same thing – the CPA that did our taxes 2 years in a row prepared the return in a way that was not necessary and did it so we could be charged more.  Well, we hired the EA to fix it, 2010, are now finishing up our 2011, and I am now going into the business so because I believe it is important to know what’s going on and maybe even help others avoid the mess we ended up in.  Not saying names.  I’ll be pursuing an EA and will move on from there with higher education, but I do need to start somewhere.  My hope is to be hired by H&R for experience and obtain the RTRP designation then pursue the EA.  Doesn’t matter who does your taxes – Beware….

  • http://twitter.com/MasonKrangleCPA Mason Krangle

    I think the folks at H&R Block provide a valuable service to those who have less complicated tax returns. As with any professional, one needs to check credentials. Unfortunately, many people just shop prices. Good article.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Thanks Mason & I agree 100%. There are a number of folks out there who are quite shady or who just don’t give the quality of service that they should be delivering.

  • Dalekmt

    Unfortunately, the one incident mentioned in this article doesn’t represent the whole. It’s interesting that the writer is an accountant himself. Over the past several decades, I have used the small tax preparation non-CPA businesses, online forms and CPAs. My worst experience of all these was a CPA firm that filed a form with a check in the wrong box with my 2007 tax returns that brought the IRS down on me with a threat that would have wiped out my savings. When I contacted them about it, they made a haphazard attempt to make it right, by writing a letter to the company who sent me the form asking them to re-issue one with the correct box checked. There was never any response. The CPA agency then billed me $175 for something that was their mistake in the first place. I dropped them and handled the problem and got it resolved myself. My new CPA is quitting so now I am contemplating finding a new one or going with the chains again.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      How else would something like this situation to come to light if not discovered by an accountant? Most people wouldn’t know to look at something like a 2-year comparison, or even know about the capital loss carry-over to notice that it was done incorrectly. But, you are right in that this doesn’t represent the whole, and not everyone who claims to be a “tax preparer” s going to be as competent or ethical as they should be. You found this out yourself unfortunately.

      What makes this different is the campaigns that H&R Block spends million on professing to get its clients the “maximum refund” and how great their services are. Anyone with any background in tax preparation would know that prior year information is vital to not only getting the “maximum refund” but also to get the return filed accurately and completely.

  • http://www.dollarversity.com Eric J. Nisall – DollarVersity

    To be blunt, it doesn’t matter what you get back, the fee is for preparing the tax return and nothing more (or at least that is how it should be). I don’t understand how they would make her file as a business, unless you mean they filed a Schedule C as a sole proprietor, because a business has to be incorporated in order to file an actual “business” return.

    I’ve seen their pricing horrors before too. I had someone come to me after using H&R Block for a simple return with just a W-2. I don’t recall whether a 1040-EZ was filed or if they filed the long form, but they charged her $215 for it. Regardless of the form, if there is nothing more than a W-2, that is a ridiculous fee to charge and bad karma to boot.

  • http://www.dollarversity.com Eric J. Nisall – DollarVersity

    The rules for claiming an adult as a dependent are pretty narrow. If you feel like she qualified, and you can substantiate it then I would suggest hiring a different preparer to review and amend the return, as well as do your future tax returns.

  • http://www.dollarversity.com Eric J. Nisall – DollarVersity

    Unfortunately Ceci, you will have to pay a fee regardless of whether you get a refund or owe on your tax return.

    If you only have $10,000 in earnings (I’m assuming on a W-2), I would suggest checking out TurboTax since you may qualify for free e-filing

  • http://www.facebook.com/tammy.corbinwilkinson Tammy Corbin Wilkinson

    They are robbing theives that don’t know what they are doing. They charged my daughter $325 to complete a 1040A. They charged her $55 to complete an efile so they could get their $325. They never ask to see last years tax return. They allowed her to claim minors that she supported that she does not have any relation to nor is she their guardian. When I stepped in to try to help her, I was told by H&R blos that they could not speak to me even with her permission. This I know is incorrect. I’m ready to contact an attorney and sue them. What can I do. She must have her return ammended, what can I do. I worked for a CPA firm for 11 years as Office Administrator. I know what they have done is wrong.

  • peebles808

    I’m curious if you have to pay your cpa for a return with many
    errors, or can you just tell him to keep it and not pay? I generally do
    my own taxes, and this year I completed them as well with
    tax-preparation software. But we owe a lot of money this year due to a
    pension disbursement, and I wanted to be certain I hadn’t made a
    mistake. The cpa I was directed to by an acquiantance made several
    obvious mistakes on the return that I could see from a glance, and he
    didn’t enter some other info I had given him. I pointed them out and
    he’s correcting them. But there are a couple of other things that are
    still wrong that he seems to just not know the law on. We are supposed
    to meet tomorrow to go over all of this. I don’t feel like I can trust
    him or the return — can I just cancel that meeting and not take the
    return, and not pay him? Or do I owe him no matter what for the work
    he’s done, even if it’s incompetent work?