Tuesday, February 26, 2008

Chopping the "Block"

H&R Block. Gotta hate 'em.

OK, maybe "hate" is a strong word.

H&R Block. Gotta avoid them like the plague. There. That's more like it.

I'm trying to recall if I told you guys about them doing our taxes last year. Not because I wanted them to but because Mr. T just went all on his own without consulting wifey. His brothers are accountants and one of them had been doing our taxes when we first got married but I think this stuff is best done outside of the family and after awhile bro-in-law's life got too hectic to deal with our finances anyway so it all worked out for the best, I say. That's when Mr. T. went to H&R Block and I was happy to let him just to get away from family. Now I knew then we needed an accountant but hadn't made serious efforts to get one.

After we bought the house in December 2006, I knew it was time to get that accountant but in February 2007, Mr. T. once again paid a visit to H&R Block and that was before I had a chance to find someone. I had been asking around, kind of waiting for the perfect one to land in my lap. But it didn't happen in time. Next thing I knew the taxes were done and Mr. T had something for me to sign.

"You may not like it," he warned. We had paid taxes every single year since we had been married so I wasn't going to be surprised to find we'd have to pay again. If we had an accountant, we might have gotten this whole thing figured out by now and been able to keep our money.

"How bad is it," I asked, stiffening for the reply.

"4 G."

"What?! You'd better be kidding, Mr. Jokester." Mr. T is known for his constant pranks. I had hoped he gave me a crazy figure to lighten the blow for the real number which was much less. My hopes were dashed. We owed over $4,000 and he was swearing up and down it was because I borrowed from my IRA to buy the house.

"No way. You can take up to $10,000 for a first-time home purchase. I told my adviser to factor in taxes so I ended up with a little over $11,000. That's about $1,000 taxable. That's NOT $4,000."

Mr. T shrugged. "I'm not signing that," I told him. "She's wrong." He shrugged again. "You call that woman and make an appointment. She needs to prove her math."

So off we went to look over her shoulder. According to her figures, my IRA withdrawal cost me about $150 in taxes. I gave Mr. T. my told-you-so nod. The culprit, it turned out, was his second job. Hardly any taxes were taken out at all. We're talking two figures here. Crazy. I could have smacked him. "Why didn't you have any taxes taken out of this money? I know it's barely $5,000 but still!" On top of that, he didn't have enough taken out of his primary job either. Great day. But this isn't why H&R Block sucks.

I have an FSA - flexible spending account - and that money is taken out pre-tax, which means your taxable income is less. H&R Blockhead, now known as HRB, didn't know what it was. "You do taxes and don't know what an FSA is? Or an HSA? What the heck?!" So HRB called over a co-blockhead and together they proceeded to tell me that yes, you add that income back in afterward. All I could do was shake my head because I knew it couldn't be right but I couldn't prove it. "After a certain income level, FSA hurts you, not helps you," they told me. I just never heard of such a thing. Could they be right? All I knew is we had over $4,000 to find, mostly because of Mr. T. but the FSA wasn't helping either.

I asked the HR people at my job. They hadn't heard such a thing.
I asked my parents. They were just as confused.
I asked friends. They were perplexed. FSA was good, they thought. Yeah, so did I.

Enter Mr. Accountant in 2008. He had come to speak to one of my business groups and I liked the vibe I got from him. I emailed him and it still felt right. I had my partner go with me to meet him and it was wonderful. "We want you to do our business and personal taxes, since they go hand-in-hand."

Mr. T and I went this past Saturday and you know what I had in tow.

"You see this, Mr. Accountant? This is last year's taxes. I just know HRB fouled them up. Can you check?"

"Of course!" He started to fiddle with the papers. "Hmm. Why did she add the FSA money back in?"


He shook his head. "No, no. She didn't do this right. That's not supposed to be added back in. Look at this."

He showed me a piece of paper where the preschool expenses should have been reflected. Even if FSA didn't count all of a sudden, Mr. T had paid his half in cash and had receipts for them. You can claim up to $5,000 in childcare expenses. The line read $0. "I knew it," I muttered.

"When did you buy your house? 2006? Let me see your closing papers. They don't always do that right either." He shook his head again. "Yeah, see this?" He showed me two lines on the closing papers. One was over $3,000 in costs we had incurred. The other was about $584. "She put in this $500 figure but she didn't factor in the $3,000 plus. This is supposed to go in too."

Mr. Accountant thinks we've got about $1,000 coming back to us from HRB's screwup. I'm hoping more but it will be a minute before we get it since these taxes have to be re-filed and for that you have to use the good old U.S. Post Office.

We left our new accountant content in the knowledge that not only would we finally have our first married year in 6 years where we don't owe a thing but we know we'll get money back to boot. And I get vindication. My plan is to take this baby back to HRB and show her the error of her ways. I just want to say, "Go back for more training," but I'll try to make it a positive thing for her. "Hey just wanted you to be aware..." So you don't screw anyone else up in the future.

Do not use H&R Block once your life gets complicated. Pass the green square or you may not be able to collect $200 or any other amount. It's worth the investment to get someone who is on your side and will listen about your life and ask you questions to figure out what you could be deducting and aren't. Or warn you about potential trouble down the road if you don't make changes. My guy is really sweet on top of all this so it's a pleasure to work with him. And after a year of fuming, it's nice to finally have sweet financial relief.

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