Should I go with H&R Block, or find a "real" accountant?

January 10, 2007 6:56 AM

My 2006 taxes are going to be complicated, for me at least. I had one full time job, and a ton of freelance gigs. I don't think I'll be able to muddle thru TurboTax like I have in past years. So, is H&R Block a good deal or should I find a "real" accountant?

I'm not richy-rich. I don't have any assets to speak of. I have one salaried full time job, and dozens of freelance gigs, for which I kept extensive records. I don't have a home office to speak of, though I did buy a lot of stuff (printer, office supplies, etc.) that I use only for the freelancing (and yes, I have the receipts).

Basically, I want to make sure I do everything as correctly as possible, to avoid getting audited (and maybe get some money back).

The past many years I've just used TurboTax, but since this will be my first time with freelancing and a possible home office on the books, I'd rather have a professional walk me thru doing the taxes.

Will H&R Block be good enough for my rather modest needs (meaning the people working there know what they're doing and will talk to me about my questions) or should I find a full time accountant with a permanent office and everything?

Bonus question: If it's decided by the hive mind that I should not use H&R Block, can you recommend a good Center City or South Philly accountant?

posted by misanthropicsarah to Work & Money (31 answers total)

We use H&R every year. What we like about using them - and perhaps this applies to full-time accountant people as well - is that for an extra fee you can buy "peace of mind" that says as long as you were honest with them in disclosing what you need to, that if any audits or mistakes pop up, they will handle it and I think they pay for the mistakes.

On the downside, we always pay between 2-3 hundred bucks to have our taxes done and they aren't usually complicated, as in we only have a mortgage and hubby's full-time job to disclose.
posted by Sassyfras at 7:05 AM on January 10, 2007

It should run you a few hundred bucks to get a real accountant as well. Every accountant reports things differently, and thats a fact. H&R should be a safe bet and you can do it on your time.
posted by thetenthstory at 7:11 AM on January 10, 2007

Oh, and I should also note for the question that your tax services for your return are a deductable when you itemize.
posted by thetenthstory at 7:14 AM on January 10, 2007

H&R offers a premium service for a couple hundred bucks a return. They actually know what they are doing.
posted by mrbugsentry at 7:18 AM on January 10, 2007

is that for an extra fee you can buy "peace of mind" that says as long as you were honest with them in disclosing what you need to, that if any audits or mistakes pop up, they will handle it and I think they pay for the mistakes.
Note: former Block employee.
The standard promise is that, if any mistakes pop up, they'll pay all penalty and interest, even without Peace Of Mind. The assumption being you would have owed that tax anyways, but the penalties are their fault.
Peace of Mind means they'll also pay the tax, and they'll represent you should you be audited.
It only covers, in both cases, Block errors. It doesn't cover stuff like "I forgot this W2/1099 at home," even if it was an honest mistake.

The premium service of Block, to me, seems a bit much for the average person. Our area's premium office handled LLC's, S-corps, and so on. I worked in a normal office and would routinely do rental income, self employment, and that sort of thing with no difficulty.
posted by Kellydamnit at 7:36 AM on January 10, 2007

H&R Block could easily handle the situation you described - though they have different kinds of offices and some specialize in a lower rent sort of return so you'll want to go to one in a nice area. Whether their services would be cheaper than having a real accountant provide the same services is a toss up.
posted by jacquilynne at 7:44 AM on January 10, 2007

Best answer: Turbotax should be fine. On Schedule C you put in what you made on your own, what expenses you had, equipment, mileage or whatever your expenses are and you are done. I did it (Using TaxCut) last year and after you say yes to have your own business it walked me through the process, including checking if you can take the home office deduction.
posted by Ferrari328 at 7:44 AM on January 10, 2007

I've had good experience with H&R Block for the last five years. Guaranteeing I won't get audited, or worse, is undeniably worth the fees they charge.
posted by deern the headlice at 7:52 AM on January 10, 2007

H&R Block and their ilk, you're basically paying someone else to enter the information into a turbo-tax-like program. The people who work for H&R Block usually aren't real accountants ... they're freelancers who have completed a course that lets them use the software. In my experience, if I threw any sort of curve-ball at them, they ended up befuddled, searching through three-ring binders for half an hour. They'll end up charging you anywhere from $250 to $500 for their services, depending on how many forms you make them print out.

A real accountant will be more likely to find creative ways to save you some money. They'll be accredited and certified, and will sit beside you in the event you get audited.

That said, I don't think you really need to worry about using Turbo-tax yourself.
posted by Dave Faris at 7:56 AM on January 10, 2007

When I went to H&R Block some time back, there was a charge for each form they entered. Since the reason I went to H&R Block was similar to yours - I had a bunch of jobs (and a interstate move) - my fee to them turned out quite high. Not sure if they just do a flat fee now, but be sure to ask.
posted by mikepop at 8:00 AM on January 10, 2007

You have got to be kidding me. H&R Block and Jackson Hewitt are known for their craptacular service. Check for yourself. I was personally screwed by Jackson Hewitt, and know people who had bad experiences with H&R Block. Both of these places use questionably trained people to deal with the mad rush of tax season, and you are particularly at risk of having your taxes messed up if you have an unusual or complicated tax situation.

I've been happy with TurboTax, but if you want a human, find an accountant. They probably won't charge that much more than the chains.
posted by kimdog at 8:05 AM on January 10, 2007

I feel like I've posted this exact comment before, and you alluded to it with "permanent office." But as you probably know, most of H&R's storefronts are only open seasonally, and their preparers not employed year-round. So if you want someone with whom you'll have an ongoing relationship, or could consult about decisions during the rest of the year, I'd find a good independent EA.
posted by staggernation at 8:08 AM on January 10, 2007

I used to think H&R Block was for people who didn't know any better, but my brother uses it and is happy, and when we did my dad's final return after his death (he also used it) they were extremely helpful and knowledgeable. That said, I prefer to use a "real" accountant myself; they cost more, but in my view they're worth it. (kimdog: try not to paint with such a broad brush. Every large company gets lots of complaints and has a "Company X Sucks!" website or two dedicated to it.)
posted by languagehat at 8:28 AM on January 10, 2007

In the past I had to file (or at least thought I did) through an tax service because I had a job were I was considered self-employed. For the last two years, this meant slogging off to H&R Block. Last year, the person filled out my Homestead Credit form incorrectly which would have got me $500 back, but since they didn't have any of the paperwork, and I wasn't able to retrace it, I never got it back.

My wife went to H&R Block last year, because she lives in one state and works in another. Her person freaked out, and arguably may have caused her to pay more in state taxes.

Having said that (and maybe because I haven't learned my lesson yet), I'll probably be going back to a tax place again this year.
posted by drezdn at 8:45 AM on January 10, 2007

I have nothing but good things to say about HR Block. I have a real accountant there, an old guy with a 35 years experience, and he gives me his cell phone number. His incisive attention to detail gets me a better refund than I was able to get on my own via TurboTax. Your mileage may vary.
posted by mattbucher at 8:59 AM on January 10, 2007

Last year I used HR Block, because I had to file a self-employment form and I knew I'd mess it up myself. The guy wound up saving me about $250 by "helping" me remember expenses I could claim. While I had a very positive experience, I very much was aware that I was being squeezed through the equivalent of a carwash, and my success felt very luck-of-the-draw. I can easily see how it could have played out for the worse.

This was in Brooklyn, NY by the way, at one of their little breakaway offices.
posted by hermitosis at 9:16 AM on January 10, 2007

I was surprised at how affordable a real accountant was when we had our too-complicated-for-us-to-do return. I really liked the fact that he was a year round resource, not just some crash course computer operator as a post above alludes to.
posted by advicepig at 9:20 AM on January 10, 2007

I second kimdog and direct you to this link at Consumerist.com. Avoid chain accountants.

Find an accountant that friends or business associates use and like. S/He will be there for you year round for any questions that come up and is a Certified Public Accountant.
posted by JLobster at 9:38 AM on January 10, 2007

Your taxes don't sound very complicated to me and I don't think there's any reason you couldn't do them with TurboTax. The number of freelance clients you had isn't important -- you had ONE side business, which is Misanthropicsarah Consulting Services or whatever. All your income and expenses for your freelance gig are just added up and rolled into this business on Schedule C and SE. It's really not hard and I encourage you to do it yourself.
posted by kindall at 9:43 AM on January 10, 2007

When I was in this situation, I contacted some local small businesspeople/sole proprietors and got a recommendation for an accountant from them. From the quotes above, it sounds like you can get a real accountant for the same price as H&R Block. I preferred that option because she was a cool person and didn't leave the bad taste of "chain corporation" in my mouth. I could have done it myself, but I figured a couple hundred bucks was worth it to offset the stress and uncertainty I would have felt if I were doing it myself.
posted by matildaben at 9:47 AM on January 10, 2007

I was formerly in your exact situation and I used TurboTax for several years with no (knock wood) repercussions. You might have trouble if your freelance clients didn't send you 1099's or if you didn't keep good records of your freelance income. Claiming the home office is where you & I differ. I figured it was worth it not to claim for a home office if it would keep the tax man off my back. Go with TurboTax, I'd say.
posted by scratch at 9:50 AM on January 10, 2007

There is no reason not to take the home office deduction if you're eligible for it, but if you worked out of your home only part time, you're probably not.
posted by kindall at 9:57 AM on January 10, 2007

I worked for H&R Block. Took a course in the autumn, passed and was hired (you can't learn tax law in one autumn class).

Its really hit or miss (as the above comments attest), a crapshoot of which desk you sit down to and who is working that day. The program they run is indeed a glorified Turbo Tax-ish program.

If you are really worried about messing it up and getting audited, you are, probability-wise, more safe going with a CPA than you are buying the Peace of Mind guarantee from H&R. With a CPA you will have more of an individual relationship; so if you, heaven forbid, have a problem with the IRS the CPA would be more likely to help, as it would be in their best business interests to keep you as a customer (and they have their signature on your return) while H&R, being a large corporate shop, would be more likely to try and ignore you because they can get another customer with a bit of advertising. But the CPA will likely cost a bit more.

There are a slew of knowledgeable and caring associates at H&R Block, but I would recommend the CPA. The probability of getting a good CPA is greater than the probability of getting a knowledgeable H&R associate.
posted by iurodivii at 9:57 AM on January 10, 2007

Best answer: There is no reason not to take the home office deduction if you're eligible for it, but if you worked out of your home only part time, you're probably not.

not true. if you've made any income from working at home you are eligable for the home office deduction. for example, if I made 20% of my income was made while working at home - I get a home office credit based on the income that i generated there.

just use turbo tax. i haven't even used software for the last couple of years and haven't had a problem with figuring out and calculating my taxes.
posted by Stynxno at 10:11 AM on January 10, 2007

Since you're doing a lot of freelance work, I have to recommend the book Self Employed Tax Solutions. It has a been a big help for me.
posted by Bradley at 10:11 AM on January 10, 2007

Oh, and the author addresses your question on her web site here.
posted by Bradley at 10:14 AM on January 10, 2007

Another vote for a CPA. I have used H&R Block once, and in retrospect, I was paying a seasonal worker to fill out a turbo-tax style form for me. I could have done that myself. They have a basic knowledge of tax laws. IMO it is a lottery whether you get a truly knowledgeable person when you go to H&R Block.

The CPA I use understands taxes incredibly well, and every year she runs the numbers a few different ways, and figures out the best strategy for filing to gives me the best result (within the law of course!). She has explained a few ways to avoid being chosen for auditing, she has answered questions on the phone during the year. I feel I get what I pay for. It costs me $250 to file with her.
posted by Joh at 11:44 AM on January 10, 2007

I have a friend who I graduated high school with who took like 3 months worth of classes from H & R Block on doing taxes. She started work last week and they offered to let her run an office in OKC.

Are you kidding me? These aren't even certified accountants! If you need to have someone else do your taxes, at least have a CPA do them. The IRS is a mother and I know I wouldn't feel comfy putting my finances in the hands of someone with 3 months training...

Disclaimer: Yeah I work for a CPA firm. (But as an admin person, not a CPA)
posted by CwgrlUp at 2:12 PM on January 10, 2007

I agree with the others that your taxes should be fairly simple if you use Turbotax. Just make sure you get the Home & Business version that handles Schedule-C. This version is recommended for freelancers or others with part-time self-employment.
posted by JackFlash at 3:51 PM on January 10, 2007

I've used TurboTax since I had a student job. It hasn't failed me yet. I was like you, in that I had a couple of independent contractor jobs last year. It really wasn't a problem going through the TurboTax walk-through.

I'll say that no tax program will get you some of the creative deductions that a CPA might be able to. But, I don't really care to pay $300 for someone to do my taxes when I can do them myself on a weekend afternoon.

That being said, if my business ever blows up, I might go ahead and hire a CPA. I'd never use a chain store place like H&R Block. It boggles the mind that you go in and pay these people to fill forms out, and then pay them more to save yourself in case they've screwed it up. No thanks.
posted by reenum at 8:39 PM on January 10, 2007

if you've made any income from working at home you are eligable for the home office deduction

Not true all the time. There are two ways for your home office to be deductible. Only one needs to be true.

1) It is your principal place of business. Hard to justify if you have a day job. (However, if you regularly meet clients there, it qualifies even if it's not your principal place of business.)

2) You use the room regularly and exclusively for work. If you have a futon in the room and visitors occasionally sleep there, you can't claim it. If you use the computer in the room for personal activity (e.g. posting to MetaFilter, burning CDs for your car), you can't claim it.

Now of course the IRS can't audit everyone, and even if you do get audited, you might still get away with it. But what you can get away with is not the same as what the law allows.
posted by kindall at 7:04 PM on January 11, 2007