Did you know the average cost to file taxes in 2020 was $220 to $323? The cost depends on if you itemize deductions, but a lot more goes into calculating the price of tax preparation services.
H&R Block is one of the more expensive options, so you should consider why that is. Then, you can determine if it’s the right tax service for you.
Keep reading to learn more about the cost of this seasonal business.
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Business Operations
One of the main reasons H&R Block charges so much is to cover their overhead costs. The company has to pay to run its software for customers who file online.
However, the business also has brick-and-mortar locations throughout the United States. Like any other business, H&R Block has to cover the cost of rent and other business expenses.
Of course, the money also has to pay for employee pay. All of those expenses add up, and the company still needs to make a profit to keep the service in business.
Expert Help
You can use H&R Block to do your own taxes, but you can do them while getting help from an expert. Asking for help is a great choice if you want to understand complex tax situations, such as mileage rates for taxes.
If you choose to get an expert to help answer your questions, you’ll pay more than for the standard DIY plan. For that extra cost, you’ll get access to trained tax preparers.
That way, you don’t have to worry as much about getting something wrong on your return. You’ll still need to go through your documents, but you’ll get the support you need.
Full Service
The next tier from H&R Block is a full-service option. If you want to just hand your taxes off, you can get an expert to do it for you, and you don’t have to do anything.
Of course, this will cost even more than the combination DIY and expert help plans. However, someone with more experience filing tax returns can handle your paperwork.
H&R Block needs to pay its team of tax preparers, so you should expect to spend more on the service. The extra cost might seem overwhelming, but it can be well worth it.
Federal and State Returns
While not all states charge state income tax, many do. The software cost and service cost from H&R Block might include the price of filing your federal and state income tax returns.
If you work in multiple states, you might also need to pay extra to file in both locations. Unfortunately, H&R Block doesn’t always bundle federal and state returns under one price.
You might expect to pay one amount based on the cost of a federal return. However, your final bill could be higher than you planned, so you should consider if you’ll need to pay to file a state tax return.
Audit Representation
Another service that may affect the cost of H&R Block is the fact that they offer audit representation. Having this service can make you feel better if the IRS audits you.
To get that support, you’ll need to pay for the Peace of Mind Extended Service Plan. It’s unclear how much this extra service will cost, but it’s worth considering your budget for tax preparation services.
You don’t have to get the representation, so you can save money. However, if your tax situation is a bit complex, it doesn’t hurt to spend a bit more now to protect you if the IRS audits your taxes.
Special Situations
Speaking of complex situations, H&R Block doesn’t have to be expensive. If you just work a traditional job and receive a W-2, you might not need more than the free tier of tax services.
However, perhaps you’re self-employed or you make money off of rental income. Various things that complicate your tax situation may require you to pay more for tax preparation services.
For example, business owners have to gather their income and expenses to find qualifying deductions. Even if you have a traditional job, if you also own your home, you’ll want more tax help because of mortgage interest or real estate taxes.
You might still rent, but if you have childcare expenses of a health savings account (HSA), you can also expect to pay more. H&R Block offers different plans for various needs, and some cost more than others.
Refund Transfer Fee
One of the advantages of H&R Block is that you can use your tax refund to pay for the service. However, you’ll have to pay $39 in the form of a refund transfer fee.
Processing the payment can cost money, so H&R Block has to do something to make it up. The service is great if you don’t have the money to file your taxes but still need to file them.
If possible, it makes sense to use your card to pay for the returns. Then, you can save the $39, and you’ll get all of your money from your refund.
Seasonal Business
Of course, H&R Block is a seasonal business, so most of their work happens between January and April. The business has to survive throughout the rest of the year.
Sure, people can file taxes later if they get an extension, but the number of customers probably isn’t as high as early in the year. So H&R Block has to make enough money to support itself for the next few months.
That could be part of why the service costs so much, even for basic needs. Unfortunately, things most likely won’t be any different if you go with other tax preparation services.
Why H&R Block Is Worth It
The service may be relatively expensive, but the top H&R Block features make the cost worth it. Before you choose how to file your taxes, consider what makes this company a good choice.
Of course, it’s not perfect, and it’s not the right fit for everyone. Here are a few things to think about when determining if you should use H&R Block.
Multiple Plans
H&R Block offers DIY plans and plans with expert assistance. If you go the online route, you can choose from the Free Online, Deluxe, Premium, and Self-Employed tiers.
When you do this, they’ll ask you simple questions to help fill out your tax forms properly. Then, you’ll be able to send off the forms to the IRS and your state.
However, you also get the option to work directly with a tax professional. You can work with someone over chat or the phone, you can drop off your tax documents, or you can have a meeting in an office.
It Can Save You Money
Even if you go with the most expensive plan, you have a chance of saving money overall. In many cases, your tax refund will be more than the cost of H&R Block’s services.
Of course, this might not always happen, especially if you don’t qualify for many deductions. But H&R Block can help you search for deductions that you won’t find yourself.
Free Option
If your tax situation is relatively simple, you won’t have to worry about the cost of H&R Block at all. Renters who work a traditional job can get away with the Free Online plan, which costs $0 for federal and state returns.
Of course, not everyone will be eligible to use that plan. Even some basic things, such as HSAs and property taxes, require a paid tier to help you file, but it’s good to know the free plan is there.
Online Option
Whether you want to file your taxes yourself or have H&R Block do it, you can do everything online. You don’t have to live near a tax office or make time to visit one in person.
All of the DIY plans are online, but you can also use the virtual meeting option to work with someone directly. Then, you’ll use the phone, chat, or a video call to go over your taxes.
Access to Great Experts
H&R Block might charge a lot for professional help, but those experts have to go through a lot of training. Also, the average tax preparer has about a decade’s worth of experience.
Some experts may have experience with different types of taxes and situations to help you. If you do your taxes for free on your own, you won’t have that support, so you could risk getting something wrong or missing out on deductions.
Whether you work with an expert or use a DIY option, you’ll get the help you need to file your taxes. Then, you can take some of the stress off your shoulders at tax time.
Why H&R Block Costs So Much
H&R Block costs a lot for a variety of reasons, from their own business expenses to special tax situations. You should consider what your taxes might look like and how much filing will cost you.
Fortunately, the seasonal business offers DIY and full-service plans to meet your needs and budget. Keep that in mind the next time you need to file your taxes.
Do you have a complicated tax matter and want to find a CPA Near You then check out article.
Do you want to predict how much you’ll owe in income taxes? Use an income tax calculator.
