H&R Block Snafu Delays Refunds
…mandatory field on tax form left blank
Marketwatch.com — H&R Block, the nation’s largest tax preparer, confirmed that its software failed to fill out a mandatory field on Form 8863, which is used to claim educational credits. The IRS would not say what percentage of the roughly 600,000 faulty returns came from H&R Block (US: HRB), but the company received thousands of complaints on its Facebook page and on Twitter.
I have to tell you, I would be pretty mad if this had happened to us. My wife and I used TurboTax to prepare and file our tax return; we have for the last 5 years or so, and have never had a problem. I used H&R Block when I was younger and all I remember was an expensive “loan” in order to get my return immediately. I thought the days of those short term refund loans were over but they are not. Now there is what is called a RAC / RAL or Refund Anticipation Check / Loan.
RALs are those short-term loans usually at outrageous interest rates, for the amount of an expected refund. Tax prep fees are usually deducted from your return amount also. A “good” RAL might have an APR of 40%; a bad one can end up costing 10 times that much.
When combined with other the cost of the RAL can approach loan-shark levels.
Thankfully, this might the last year people need to be warned about RALs. That’s because the RAL industry is getting squeezed by federal regulators, who are cutting off bank funding to the biggest RAL lenders, and by the Internal Revenue Service, who is making it easier to get refunds quickly and without crazy fees.
You know, what’s really problematic is the fact that you have to pay H&R Block something like $150 for 30-40 min of time with their “tax consultant”. If I’m paying for an “expert” to prepare my taxes, I would expect there to be no errors. I realize the “tax consultant” is a human, prone to making mistakes, but this goes farther than the individual tax preparers, the fault falls on H&R Block for failing to stay up-to-date with the IRS and failing to properly train their “tax consultants”.
H&R Block explained that a form had changed, Form 8863 relating to student tax credits, and that in previous years, five lines on the form could be left blank for a “no” answer. Starting this year, preparers must enter an “N” in those fields or risk a delay.
H&R Block said it learned about the tax form change after it had submitted hundreds of thousands of tax returns. The IRS said it was aware of the problem and it is continuing to review the situation and work with “affected software companies to assist in the processing of those tax returns.”
You know, I was always instructed when filling out any form, to never leave a “blank”. If it’s a “no” answer, mark it “no”. If something doesn’t apply, use “n/a”. You would think that H&R Block’s highly trained tax preparers would follow this thinking just from common sense, especially if you are dealing with the Government.
I feel sorry for Mr. & Mrs. John Q. Public who filed their tax return and is expecting their refund only to find out it’s going to take at least 21 days for the IRS to figure everything out and issue the refund.
Now, my good friend TurboTax is not exempt from errors either. Last week, the Minnesota Department of Revenue warned taxpayers against using TurboTax to file their state income taxes, finding 10,000 returns had problems. In a terse statement, the Minnesota Department of Revenue said it would stop processing tax returns filed through Intuit (the company that operates TurboTax) if the problem is not fixed.
Well, I don’t live in Minnesota so it doesn’t affect me but if I did, I wouldn’t be as upset with TurboTax since I know full well that I am filing my return on my own with the help of a computer program. There’s not a $300 an hour “Tax Consultant” using their knowledge and expertise to make sure my return is done correctly.
If you want to insure your taxes get prepared correctly, seek out an Accountant or Bookkeeper certified to prepare tax returns.
… Often times you get what you pay for.
Worst Cities for Credit Card Debt
http://abcnews.go.com/Business/story?id=7727426&page=1
Miamians Owe More to Credit Card Companies Than Anyone in U.S.
By LAUREN SHERMAN
Forbes.com
June 2, 2009—
Gone are the days when Americans didn’t think twice about splurging on a second pair of Italian-made leather brogues, a flat-screen TV for the bathroom or a new made-to-measure suit for the office.
A new bill passed by the Senate on May 19–which is designed to tighten rules on credit-card interest rates–might keep consumers from letting their spending get out of control again. But one could argue that such measures are unnecessary, as we’re throwing down the charge card less and less these days anyway.
In March 2009, outstanding consumer debt fell by $11.1 billion to $2.55 trillion, according to the Federal Reserve. Revolving debt in particular–which consists mostly of credit card debt—fell for the sixth month in a row by $5.4 billion to $945.9 billion.
However, some Americans don’t seem to understand the errors of their past ways. The nation is still deeply indebted to credit card companies–and that isn’t changing anytime soon.
“People are tightening their belts temporarily,” says Terrence Daryl Shulman, an addiction expert and founder of the Shuman Center for compulsive theft and spending. “But I’m not convinced that they’re ‘cured.'”
Consider the residents of Miami, Fla. The metropolis has fully felt the effects of the real estate crash, including a 12% decrease in hotel occupancy for the first quarter of 2009, an increase in unemployment to 8.5% in March 2009 and a 9% year-over-year increase in foreclosures for April 2009. Yet, on average, Miamians owe more of their personal income to credit card companies than those in any other area of the U.S.
While the median household income is a moderate $43,333–the national average is $50,233–average credit card debt in each home is $9,797.38. That means to pay off outstanding credit card bills, debtors would have to forgo 22.61% of their incomes.
Other areas where Americans continue to spend far more than they earn include Tampa, Fla., where the average household owes 17.1% of its total income; Los Angeles, where it’s 16.81%; Jacksonville, Fla., which owes 16.38% on average; and Orlando, Fla., indebted by 16.37%.
Behind the Numbers
To determine where Americans are still overspending, we turned to Atlanta, Ga.-based Equifax, one of the three largest consumer credit reporting agencies in the country. From its database, Equifax determined total credit card debt in each of the 50 largest metropolitan statistical areas and metropolitan divisions from the first quarter of 2009. We found the average credit card debt per home by dividing the number of households in each metro area, determined by the U.S. Census Bureau, by the overall debt of the area. (Defined by the U.S. Office of Management and Budget, metro areas are used by federal agencies in collecting, tabulating and publishing federal statistics.)
Finally, we divided each metro area’s average debt per household by May 2009 median household income, determined by Moody’s Economy.com, an independent provider of economic analysis and data. This last calculation gave the average percentage of household income owed to credit card companies in each area.
While most places on the list aren’t too surprising–Las Vegas’ housing crash and dismal tourism numbers, down by 8% in the second quarter of 2008, mean residents still spending are digging deeper holes; and Riverside, Calif.’s dreary unemployment and foreclosure rates keep the debt-to-income ratio high–there are some more presumably stable spots that make the list.
Better Place, Same Debt
For example, Austin, Texas, reports a low cost of living, cost of housing and unemployment rate, but on average households owe 14.12% of their overall income to credit card companies.
Same goes for affordable spots like Indianapolis, Charlotte, N.C., and Cleveland, Ohio, where the percentage of indebted household income is 13.63%, 14.33% and 14.45%, respectively. While Austin is fortunate in that its unemployment rate is still fairly low (5.5%), the other places have high unemployment rates, which means despite the fact that the cost of living is moderate, residents are still having to charge more than they should.
For example, in Charlotte, the March 2009 unemployment rate was 11.4%, up from 5.2% in March 2008. (As the headquarters for Bank of America, the city was hit particularly hard by the financial collapse.) In both Cleveland and Indianapolis, the unemployment rate is 8.7%, which is 0.3% below the national average, but still 4.7% higher than what’s considered economically healthy by economists.
Regardless of what is–or isn’t–driving our spending, it comes down to this: Americans are still heavily indebted to creditors. While consumers have cut back, they’re still spending more than they should.
However, Martin Lindstrom, a retail marketing expert and author of Buyology: Truth and Lies about What We Buy, argues that Americans will never again conspicuously consume like they have in the past.
“This recession has created a ‘slap on the chin,’ or ‘wake-up call’ so dramatic that I don’t think people will forget this for years,” he says. “These kinds of catastrophes alter your behavior for the rest of your life and often without your conscious influence.”
Whether or not Lindstrom is right remains to be seen. But for now, many Americans are still overspending by a long shot.
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