Tax return costs

[steuard]

On my way home from work today, I saw that H&R Block will fill out your 1040EZ for "just" $39. My first reaction was a sort of confused disbelief: I was able to use a 1040EZ a few times and it was really, really easy. It's basically one side of one page, just thirteen lines. You add some things, then you add some other things, then you look up a number in a table, then you subtract once.

So what's that $39 for? You'd need to look up and write down most of the same numbers on some sort of form to give to the folks at H&R Block so they'd know what to fill out for you. Is the going rate for addition and subtraction really that high? It's entirely possible that yes, it is, and I'm just way too far removed from average people to understand how intimidating math can be to them. But this math is so basic that this would really disturb me: this feels like the mathematical equivalent of paying somebody $39 to read the Denny's menu out loud for you. If that's not it, maybr people treat it as insurance, to have help in case of an audit... but what fraction of 1040EZs get audited?

I know there are some accounting folks out there, and presumably lots of people who've had more experience using accountants than I have. Do you have a sense of what the real answer is?

[Possible subtext for all of this: Kim and I have just changed jobs, moved across the country, and bought a house. We've always done our own taxes, and Kim's very thorough about checking the details and actually seems to enjoy the process at least a little. Is there any compelling reason to pay a professional help out this time?]

Comments

[ukelele.livejournal.com]

People are super-intimidated by math. Shut down a lot of conversations on airplanes that way ("Oh, you're flying back to college? What are you majoring in?"). I went to a presentation at my daughter's school the other day on their math curriculum (which is really rather clever, designed to inculcate a lot of number sense in the early years) and there were SO many parents who were all like, whoa, if only it had been taught this way to me, because I *never* understood math. I could do formulas by rote until I forgot them after the test, but I never understood what I was doing. And, I mean, the area I live in, the demographic of parents there, we are talking people with high-powered careers and graduate degrees, who apparently never really understood what, e.g., multiplication algorithms, meant.

I think people are also just intimidated by taxes in a way that has nothing to do with math. (That, or thinking about paying them is stressful/upsetting, and they'll pay someone else to think about it for them.) I was also raised in a household where we did our own taxes, and I have done our taxes all but one year, but I gather this is very much Not Normal to a lot of people.

(The one year I paid a professional was the year I had a 3-month-old at tax time, which was also the set of taxes covering liquidating various assets and buying a house, so it involved unusually large numbers and I was unusually stupid and paying someone seemed like the better part of valor. That said, I have done my own taxes in years that involved income in multiple states; mortgage interest; investment assets; and royalty checks (not all at once, and btw the taxes on royalty checks are incomprehensible). So I see no particular reason not to do it yourself. The sleep dep weighed heavier than the house-buying in my decision to have a professional do it.)

[kirin]

I did my taxes in pencil for ages, but for the last few years I've been paying about $14 to do them online (through TaxAct, which I thought had the best price/performance ratio last time I checked around). Web apps have advanced enough that it's no longer cumbersome/worrisome, and in addition to checking your math it will point out at least some sub-set of all the possible angles you may have missed, while still letting you pick how to allocate things when there's multiple valid choices. And of course it e-files for you.

[ricevermicelli.livejournal.com]

People are super intimidated by taxes.

My opinion of H&R Block is not high. I think that they market themselves by convincing people (particularly those in low income groups) that taxes are more complicated than they really are, and that they then prey on those groups by offering refund-anticipation loans and ridiculous interest rates. If your return was done by H&R Block and you are audited, you are probably up exactly the same creek as you would be if you did your taxes yourself, because H&R's turnover is high, and god alone knows where the guy who did your taxes that year is now. (In fact, your taxes may have been done by some guy in India.)

You might benefit from professional help this year in dealing with your moving expenses (some of which are I-forget-which-kind of tax deductible), and in helping you figure out various things about your house (I believe there's a first-time homebuyer's tax credit that you may qualify for). You may also have to sort out income tax in two states, it might be nice to have help on that. If you sold stocks or bonds in order to buy the house or do anything else at all, there's probably a schedule D you have to deal with and schedule D (for reasons passing my understanding) tends to strike fear into the hearts of many but is actually not so bad. If you're feeling brave and like this would be fun, there's no reason you couldn't tackle it on your own. If you're worried, you could find a local CPA and pay to have your return looked over. Don't go to H&R Block. They suck.

[steuard.livejournal.com]

That's good to know about H&R Block: if we do need someone, we'll aim for a locally owned firm. (So the firm as a whole doesn't take responsibility for the work of its employees? Or is it just that the whomever they found to help you out wouldn't have the first idea of your circumstances?)

And responding to you and more generally to everyone who's replied, thanks! I'm guessing that we're going to keep doing our taxes ourselves, since the challenges involved probably aren't any worse than they have been at times in the past. (I'm sure it won't rise to the level of the hell that was computing estimated tax payments with scholarship income distributed very unevenly over the course of the year, including a large and unexpected check in October. That was pretty nuts.)

[ricevermicelli.livejournal.com]

It's that whoever they found to help you wouldn't have the first idea of your circumstances, and might or might not understand the notes that were (or possibly weren't) made when your return was prepped.

[chalgaryn.livejournal.com]

I don't think the estimated tax years were actually as annoying as the year I changed states and we got married. We had to figure out our federal 1040 details together _and_ separately in order to file the federal jointly and then your individual IL taxes and my individual part-year IL & GA taxes. So, yeah, going through 3 federal and 3 state tax forms was tedious.

This year will be a cakewalk compared to years like that :-)

[minorninth.livejournal.com]

I don't think it's just math. It could be:

Being afraid of taxes in general

The peace of mind knowing someone else is double-checking their work

Being perfectly capable of doing it but not wanting to *worry* about it

Not being sure if you qualify for the 1040EZ

Doing taxes on behalf of someone else (an elderly parent) and not wanting to feel responsible for possibly making a mistake

I always did my taxes myself, but this year we have a mortgage plus Ronit is self-employed, working as a contractor, so we have a lot of weird deductions - and we decided it would be worth a couple hundred dollars to have someone help us make sure we're taking maximum advantage of deductions available to us.

[beth_leonard]

When we started renting out our house we started paying someone else to do the taxes. The reading required to figure out weather or not we could take a deduction, and for how much (we were still living there too) was not worth the time. Now our investments are so complicated our accountant has to ask her boss to help with them and they fall into the grey areas of tax law. We're much happier having someone else's stamp of approval on it.

As for the $39 for H&R block, I think ricevermicelli nailed it with how they market themselves to low-income groups. I know I considered it the year I had $18 in my bank account and was due to receive $700 from the government. Places like H&R block advertised that they will do your taxes and give you the $700 up front, and then they have the government send the check to them. It's like the payday loan places -- a crazy interest rate on a short-term loan, but when you're broke and need the money you go for it.

--Beth

[ukelele.livejournal.com]

That's a very...*specific* sign in your icon there.

[minorninth.livejournal.com]

Some religious nutjob in SF found the AGU (American Geophysical Union) conference and asked if "geophysics" meant not believing in creation. He came back a few hours later with that sign and a bullhorn and tried to convince scientists they were all going to hell for studying the earth.

I thought it would be perfect for a response on Steuard's journal.

[steuard.livejournal.com]

I love it! By which I mean I loathe it, of course, but it's so ridiculous that it's funny. (But this is one reason why creationism is a hot button issue for me: it wouldn't take much for them to shift their focus to my field next. "The only Cosmic Microwave Background is what God put there Himself!")

[ukelele.livejournal.com]

God designed the Cosmic Microwave to cook His popcorn.

[ukelele.livejournal.com]

Oh, and self-employment taxes make me want to stab myself. That is definitely also a circumstance under which I will hire a preparer, if I ever have to deal with that again.

[wrenb.livejournal.com]

We paid accountants to do our taxes the year we bought our house because we became landlords and we wanted someone to hold our hands over the depreciations. Total waste of money (although it came out of the return so it didn't hurt). Since then we use TaxAct.