Saturday, March 29, 2014

H&R Block Get Your Billion Dollars Back Tax Scam

You’ve probably seen the commercials. H&R Block has been running advertisements this year telling everyone that they can get to listen that American taxpayers are giving $1 billion to the IRS that’s really their money — and all because they’re doing their own taxes instead of letting H&R Block do their taxes for them. H&R Block wants you to “Get Your Billions Back” since you are leaving so much money on the table.

To emphasize that huge $1 billion amount which isn’t being claimed, they are running a number of different commercials to show how much money that $1 billion is. One is where they have a concessionaire placing $500 on every seat in every stadium in the US:

What both these commercials do is lead you to believe is that by doing your own taxes, you’re making huge mistakes that could be costing you hundreds, if not thousands of dollars that you would be yours if you just let H&R Block do your taxes instead. They are using your fears of losing money doing your own taxes to try and convince you to let them do your taxes. It’s a good strategy on their part that happens to be a con game to make you fear you’re losing a ton of money doing your own taxes when in reality you’re not.

While they are hoping that you make the assumption that you’re losing $500 or more (like the amount they place on the stadium seats), the truth is that it’s likely you aren’t losing any money doing your own taxes. If you are losing money, it’s a whole lot less than the commercials imply. How do we know? Simply run the numbers.

There are over 50 million families that do their own taxes. That means that if all the families that are doing their own returns aren’t claiming $1 billion worth of deductions that they could claim, each family is failing to claim a little less than $20 each on their returns. Yes, that’s right. If you are doing your own taxes, on average you’re failing to claim about $20. Why don’t they say this in their commercials? Because they know perfectly well if they did, nobody would go to H&R Block to get their taxes done.

Still, $20 is $20, so why not have H&R Block find you that extra $20? A good question until you realize how much they charge to do your tax return. In 2013, H&R Block charged the average person just under $200 ($198) to do their taxes. If you do the math, you might save $20 from the IRS, but you end up losing $178 out of your own pocket to H&R block. All of a sudden, it doesn’t sound like such a great deal.

It gets even worse. If you read the fine print in the commercials, it says that a study shows that H&R Block is able to find savings for about 1 in 5 people who do their own taxes. That’s right. You need to pay nearly $200 for a 20% chance of getting a bit of savings from them. On the other hand, if they are only finding 1 in 5 people that can get a greater refund, that means the refund for those that they can find it for increases from $20 to $100. Of course, since you are paying nearly $200 for them to do your taxes, you are still coming out $100 behind by letting them do your taxes.

What this all says is that the “Get Your Billion Back” commercials are an extremely deceptive advertising campaign to make you think you’re losing a lot of money by doing your own taxes when in reality, you’re not. All you need to do is run the numbers, and they will tell you that you’ll likely spend much more of your own money getting your taxes done by H&R Block than you would if you did them yourself.