By now, we’ve all seen the H&R Block commercial with the guy telling you to “get your billions back, America,” leading some to believe that they have millions or even thousands left behind when not using their services. But how real is this claim? Is filing yourself so much better or worse than hiring a tax preparation professional? The answers to all of these are shared below.
What is the Tax Preparation Billion Dollar Claim?
On January 15, 2014, tax preparation giant H&R Block launched its “Get your Billions Back, 
America” campaign. They reference a study showing that when Americans prepare their own tax returns, about 20 percent of them do not claim some or all of the tax credits and deductions that they qualify for, in addition to other tax preparation mistakes. The cost of all this do it yourself-ing is estimated to be a whopping $1 billion dollars a year Uncle Sam gets to keep in overpaid tax money. There are even commercials that show people placing $500 on every football stadium seat to illustrate the amount. So could you be losing $500 each year?
Tax Preparation Billion Dollar Claim by the Numbers
With over 168 million American tax payers, about 50 million do their own taxes. Many of these are tax payers with one or two sources of income and only a few deductions, most likely using the 1040 EZ form, which takes about 30 minutes to fill out. Others are tax payers who have seen how professionals do it each year and input their most current information into their returns.
However, even if H&R Block’s numbers of one out of five doing them wrong is true, that means that 10 million are incorrectly filing taxes and missing out on a bigger refund, the total of which is $1 billion. When you crunch the numbers, that means the total overpaid for each misfiled return is about $100, or far less than a preparer like H&R Block charges to prepare your taxes – a task at which you have an 80% chance of doing right according to them.
Who Should do Self Tax Preparation?
There are no hard and fast rules to who should prepare their own taxes but it helps if:
- You only have one or two sources of income in the form of W-2’s
- You have few or no deductions and/or credits to claim
- You have no dependents
- You are a taxpayer who is not paying off a student loan
- You are a taxpayer who has not set aside anything for retirement
- You are a taxpayer who is not eligible for the Lifetime Learning Credit
- Your total income is less than $100,00
- Single and married people can file the 1040EZ
More Interesting Items on H&R Block Tax Preparation
Given that I’ve spent a decent amount of time looking for this study on the official H&R Block website and good old Google – and was unable to come up with anything – alarm bells are ringing. After all, if a solid scientific study is making your good or service look great, why not link every page to it? Being unable to find it does not lend a lot of credibility to the campaign.
There’s also a biologist at UC Berkeley who referred to this as The Billion Dollar Scam and wrote a convincing piece on why the odds are better at Powerball than at getting someone at H&R Block to give you tax preparation services that will get you back more in your refund than what their services cost.
In November 2014, William Cobb, the President and CEO of H&R Block, wrote to the IRS Commissioner and asked that the agency implement changes to tax preparation forms to make it even more difficult for taxpayers preparing their own returns to claim the all-important earned income tax credit (EITC). Seems fishy H&R Block would want even more self-preparers to get it wrong.
Buyer beware indeed.
Tax Preparation in Houston
And if you are in need of expert tax preparation services in Houston or the surrounding area, please contact me.