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.
Little Known Database That Helps Debt Collectors Call You at Work
…The Surprising Way Debt Collectors Know Where You Work
BusinessInsider.com — It is “perhaps one of the most powerful and private databases of American’s personal information ever created, containing 190 million employment and salary records, covering more than one-third of US adults.”
So there is this site called The Work Number and basically what they do is employment verifications for employers. That sounds OK right? Well, it is. It keeps companies from having to spend time verifying employment, they just outsource the job. One catch however, is that the company is required to provide The Work Number with weekly salary and employment information. So to make this requirement easy to handle, most companies provide The Work Number with access to their HR database directly.
What this means is that The Work Number has the work and salary history of millions of Americans. You might think that this is no big deal, after all they have to do employment verifications, and they need that information. Here’s the problem, The Work Number is owned by Equifax, one of the big 3 of credit reporting agencies, and they like to sell information, and sell they do. They market directly to debt collectors.
…ever wonder how the bill collector got your work number? Well, there you go.
Are debt collectors allowed to call you at work? Yes and no. Let’s take a look at some of the things the bill collectors can and can’t do. Keep in mind that what applies to debt collectors doesn’t always apply to the creditor who is trying to collect their own debt.
- FDCPA (Fair Debt Collection Practices Act) is what regulates debt collectors and their practices.
- Third party disclosure — debt collectors are prohibited from disclosing or discussing your credit or debt, with any third party. There are exceptions however, they may talk to your attorney, a credit reporting agency and the original creditor. They can also contact your spouse or your parents if you are a minor.
- Debt collectors are not allowed to contact you at unusual or inconvenient times or places. Typically the time to make calls is between 8 a.m. and 9 p.m.
- They are not to contact you if you have an attorney or other agency handling your debt.
- They may contact you at work unless, your employee prohibits calls at work or you advise them that you cannot receive calls at work, it’s best that you send a letter to that affect.
- They may not harass or threaten you. Specifically they cannot:
- Threaten violence
- Any harm or threaten to harm you or another person’s reputation or property
- Use profane or abusive language
- Call you repeatedly, or
- Make calls to you without identifying themselves as bill collectors
- Collection companies are not allowed to add interest of fees or charges that are not authorized by the original agreement or by state law
- …and many others
There is one tried and true method to get the debt collectors off of your back… pay your bills! I know it sounds easier than it is. If you find yourself overwhelmed with debt the best thing to do is contact a professional to help you get your life back.
If you are currently past due, the benefits of a debt management program will provide you with a fresh start. The biggest long-term benefit of the debt management plan is the reduction in interest. Reduced interest allows you to pay off your principal balances faster while saving you possibly thousands of dollars in finance charges.
In order to determine your eligibility you can fill out an online budget application form Now and then you will speak with one of our Certified Personal Finance Counselors © at (800) 920-2262.
How to help aging parents cope with debt
By Andrew Housser
For many people, as they age, the term “golden years” may be a misnomer. More and more people are struggling with debt, due to the combination of the recent economic recession, lower income as they age, and increasing health costs.
How tight are budgets? Among those older than age 75, nearly 40 percent lived below 200 percent of the poverty line in 2009, with annual income of less than $26,000 for a couple. And older people are going deeper into debt: In 2007, the most recent year with data available, people over age 55 had a median debt level of $43,000. That is 170 percent higher than in 1992. In 2007, families with a head of household age 75 or over spent 7.7 percent of their income paying off debts.
If you are concerned that your parents might be struggling with debt, here are some suggested ways that you can start to help them get a handle on their financial problems.
1. Open the lines of communication.
Begin talking with your parents about their finances before they need help, if possible. Some families find it easier to open a discussion by mentioning an article they read on the subject, for example. Or you can ask in the context of a current event. It can be awkward to discuss your parents’ finances, but if you assure them that you are only wanting to be sure they are taken care of, you can start the conversation.
2. Determine the need.
Once communication is open, you can start to determine if your parents are in need of help or not. The first step is to ensure that your parents have food, shelter and health care. Especially if you suspect they are charging these expenses to credit cards, or going without, ask if you can help with these costs, within your means. Or help them find other resources to help.
3. Check that they are comfortable managing their money.
Many people have trouble managing their budget after they retire. Even people who live frugally might find that they simply cannot make ends meet. Other people face real challenges after they are widowed. If the spouse who handled the bills dies, the widow or widower might have difficulty coping with their finances on their own.
4. Decide on how much you can help.
If your parents are in need, are you able to assist them financially? If so, how much? Can you help with long-term care or medical costs? What about the cost of paying off debt? Can you help an elderly parent pay for the cost of assisted living, or would you prefer your mother or father live with you if they need support? Make a personal plan, together with your spouse and family if appropriate, to set boundaries that will let you help your parents, while not going into debt yourself to do so.
5. Stand on your own two feet.
Some adults are concerned about their parents’ financial lifestyles, but meanwhile, their parents are still helping to support them. A good step to help parents live within their means is to ensure that they are not still funding adult children’s lifestyles. Do not rely on your parents to pay for your education, student loan repayment, care payment, rent, utilities or other costs of living. Discuss this topic with your siblings as well. To go a step further, if parents are paying off a son or daughter’s student loan, or a parent loan taken out for the child’s education, talk with your parents to see if you can take on some or all of payments to ease the burden.
6. Consider medical expenses early.
A huge issue for aging people is the cost of health care. Be sure your parents apply for Medicare close to their 65th birthday. Find out if they have long-term-care insurance, and if not, if it makes sense for them to purchase it (it is less costly the earlier you purchase it). It is also possible for children to purchase insurance for their parents, or save money in a dedicated account to help with this expense later on.
7. Understand implications of debt on your parents’ estate.
Don’t panic if your parents have credit card debt. This is not license for them to build up credit card debt, but do understand that, to the extent the estate cannot cover the debts, children will generally not be liable for the debt after they die. (Laws vary by state, but typically, debts are paid by the estate after a death.) The major issue caused by debt is your parents’ quality of life and level of worry during their lifetime.
8. Be cautious about co-signing on debt with your parents.
If you co-sign a debt arrangement, and if your parent does not repay the debt, you will be liable to repay it in full. As such, approach this decision with a full understanding of the facts and the risks.
9. Get outside help if needed.
Some families find it is preferable to hire an outside bookkeeper to help parents with their financial management — and maintain their privacy. Other families divide and conquer, splitting up responsibilities among siblings or other relatives. Community organizations, from churches to nonprofits to social services organizations, also might be able to help with subsidizing bills, providing food assistance, or offering community resources. If your parents own their home, a reverse mortgage can sometimes help, allowing them to use some of their equity to fund living expenses now. Take the time to research your options and find help that works for your family.
10. Consider other means of help if their debt is overwhelming.
If parents are unable to pay their debt, are keeping lights off or skipping necessities to pay debt, or are dodging collections calls, you might need to investigate alternatives together. Many potential solutions exist for people struggling with credit card debt. Some people might qualify for a debt consolidation home equity loan. Others might benefit from debt management programs that can offer interest rate reductions, or debt settlement (also known as credit advocacy) for those in need of significant payment relief and principal reduction.
Whatever means you choose to help elderly parents resolve their debt problems, it is well worth opening the conversation with them. By helping them find better financial footing, you can both find peace of mind, and help make those later years “golden” after all.
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