Although H&R Block has historically closed down stores post-tax season, 400 locations combined with a big hit to their stocks recently has raised some financial experts’ eyebrows.
There are two major factors at play that has caused H&R Block to abruptly call for the closing of 400 locations.
The new Tax Cuts & Jobs Act has been the first major change to the IRS tax code for a long time.
We have detailed in another article what the Top 6 Changes to Individuals and Businesses were.
The end result of many of these changes, which take effect for the 2018 year, will aid in the simplification of tax preparation on the individual side.
The new tax law has also made major changes for business, the biggest changes are to expenses and deductions.
If you own a business it would be a good idea to look into or ask your CPA what will qualify as a business expense (deduction) in 2018.
Because of this major change, we have put together a guide for you to reference at your convenience.
It covers the major changes to meals and entertainment expenses for businesses starting for the 2018 tax year.
UPDATE: The COVID-19 Relief Bill, signed by the President on December 27, 2020, made changes to deductions for business meals in tax years 2021 and 2022. Businesses will be permitted to fully deduct business meals that would normally be 50% deductible. Although this change will not affect your 2020 tax return, the savings will offer a 100% deduction in 2021 and 2022 for food and beverages provided by a restaurant. The objective of the temporary deduction is to stimulate the restaurant industry. In the list of examples below, we’ve indicated those deductions which will change between 2020 and 2021.
With the rise of DIY tax software, such as Intuit’s Turbo Tax and H&R Block’s Tax Software, there have been many people choosing to stay home and do their own taxes.
With the addition of the Tax Cuts & Jobs Act making personal taxation simpler, there will be even fewer individuals going into H&R Block offices for tax preparation work.
Unfortunately for H&R Block Franchise Locations, the company is positioning itself to move into the DIY Tax space.
Because of the simplification of the tax code and the advancements in technology, there are fewer new clients seeking out the services of H&R Block Franchise Locations as many individuals will migrate to a DIY online option.
On the other hand, for those individuals who have sophisticated personal finances and need a more advanced tax advisor, would be hard-pressed to visit an H&R Block office.
The education requirements for a tax preparer at H&R Block is not a matter of education, but age.
Their website states “H&R Block requires students to be 18 years of age to attend the Income Tax Course. A GED or diploma, however, is not required.” (Source: H&R Block, Become a Tax Preparer).
This is not to say that all H&R Block employees are uneducated, inexperienced, and remain so. However, the bar is set low for entry-level tax preparers.
H&R Block uses an in-house course to train individuals, and within as fast as three days they can be certified tax preparers based on H&R Blocks standards.
Those savvy individuals that need proactive tax advice and strategies to manage, mitigate, and minimize their tax burdens, would be in the market for an educated, licensed, and certified tax preparer.
The education requirements for an average CPA include:
Bachelor’s Degree in Accounting
Master’s Degree in Accounting, Business, or Taxation, or at least 150 additional credit hours.
1-2 years Experience in the field of accounting and taxation under a licensed and certified CPA.
They must pass the 14-hour Uniform CPA Exam to obtain a license from their state board of accountancy; requirements vary, but all states require passing the CPA Exams.
The CPA license is known as one of the most difficult professional licenses to receive.
If you are an individual looking for help with your taxes, for the time being, H&R Block may still be a great option if your main concern is cost.
Based on the education, training, and testing requirements stated above, you may be losing on major tax savings and credits earned by taking that route.
You will also run into limited support in regards to proactive tax planning for the following year.
Great for those on a tight budget
A good option for individuals with a simple tax situation
Missed Tax Saving Opportunities
Missed Tax Credit Opportunities
Limited to No Support after the fact
No ProActive Tax Planning
If you own a business
H&R Block is probably not the best choice for you if you own a business.
Business taxation and individual taxation differ greatly and it is always recommended to find a specialist in one area or the other.
A business not only requires tax preparation services come tax season but also requires solid bookkeeping and accounting.
Solid Accounting and Bookkeeping ensure you have accurate financials as a business owner for:
ensuring proper tax strategies.
an accurate tax outcome.
For example, our firm ProAdvisor CPA specializes in and offers our services to Small Businesses, Franchises, and Startups.
The first thing you should ask yourself is,
“Am I concerned with proactive services, accuracy in tax preparation and tax planning or am I more concerned about the fee to prepare?”.
Everyone has different deciding factors when choosing their tax option, however, it usually boils down to those two things.
You are either more worried about the cost of doing your tax return or you are more interested in the quality of the tax services offered.
A CPA firm is always a good choice.
Many CPA firms are based around a small local geographic.
Simply search on google for a local CPA firm near you and do your due diligence.
Interview them until you find one who stands out as a good fit for you.
Not all firms are cut from the same cloth and specialize or focus on different areas.
For example, ProAdvisor CPA only works with individuals to assist tax planning and tax preparation to help Manage, Minimize and Mitigate the tax burden through proactive guidance throughout the year.
We have put together a list of 13 questions you should ask when hiring a CPA for your business.
Use this link (Questions to ask when hiring a CPA for your business) to read the article and/or just download the Free Questionnaire that includes all 13 of the questions.
This publication is designed to provide information on federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.